Frequently Asked Questions

Should I register with the SEC or the state(s)?
Under the current regulations, investment advisors with less than $100 million in assets under management within four months of their firm-approval must register with the state regulators. You register your firm in the state that you have your principal place of business. Once a state Registered Investment Advisor‘s assets under management exceed $110 million, they must register with the SEC. [Note: You can voluntarily register with the SEC when assets exceed $100 million]

There are some exemptions that enable advisors with less than $100 million in assets under management to register with the SEC.

To learn more about these exemptions, please contact us at (603) 430-8317.

In which states do I need to file?
If you are a state registered RIA, the primary state where you file will be your home state where your office is located and where you conduct your advisory practice. As your business grows and you add clients in other states, the general rule is that you are allowed to have up to five clients in each of the other states without having to make any filings or pay any fees (unless you have a place of business in that state – in which case you need to register in that state).

However, before you take on your sixth client in any state, you will need to register and be approved by the state. Four states do not recognize the five-client allowance. They are Nebraska, New Hampshire, Louisiana, and Texas. The process varies across these states, but all four require some level of registration and payment of fees right from the first client.

For SEC registered RIAs, even though the firm is registered with the SEC and the states have no supervision authority over the firm, you must “notice file” in your home state and any state in which you have a place of business or more than five clients. Notice filing is a fairly simple process of electronically sending the state a copy of your Form ADV Part 1, and paying the notice filing fee.

Note that although the SEC registers certain RIA firms, the SEC does not register the Investment Advisor Representatives (IARs) of the firms. The states can and do require registration of the IARs (with certain exceptions like Minnesota and New York) having a place of business within the state.

How long does the registration process take?
The registration process, including entitlement and Form ADV filing, generally will take between six and eight weeks, depending on the complexity of the services offered by your firm and the backlog of pending applications at the various regulatory agencies.

At both the SEC and state level, the regulators have between six and eight weeks from the date your application is submitted to respond to us with questions about the pending application. Our goal is to respond as quickly as possible to the regulator to help keep the process moving forward.

What forms do I need to file?
Form ADV Form ADV is the form investment advisors must complete in order to become registered with either the SEC or the state regulators. Form ADV explains to the regulators how you intend to run your business and your Brochure is part of the Form ADV you provide to your prospective and current clients so they understand how your firm operates.

Form ADV Part 1 is filed electronically through the IARD system. Firms registering with the SEC must complete Part 1A and firms registering with the state(s) must complete Part 1A and Part 1B.

The Form ADV Part 2A (Brochure) and 2B (Brochure Supplement) are your disclosure documents that you will provide to prospective clients explaining how your firm operates and who your investment advisor representatives are. You are required to offer or deliver these documents to your existing clients on an annual basis. These documents are also required to be updated annually and filed through the FINRA IARD system within 90 days of the end of your fiscal year.

For more information about this important regulatory change, please contact us at (603) 430-8317.

Do the SEC or States have filing requirements?
Currently, the filing requirement for firm’s registering with the SEC is to file the Form ADV Parts 1 and 2 through the IARD system and pay the SEC and state notice filing fees. You will also be required to register an Investment Advisor Representative with the state where your firm have its principal place of business.

For firm’s registering with the state regulators, typically, the states do have particular filing requirements. Each state is slightly different in their requirements.

To learn more about how we may assist you through the registration process, please either complete the adjacent form or call us at (603) 430-8317.

Do I need to have Written Supervisory Procedures?
Yes. The regulators require that you have in place your firm’s policies and procedures written, so that all of your employees have an understanding of how the firm is to operate as of the day your firm becomes registered.

You are also required to have a Privacy Policy, Code of Ethics and Business Continuity Plan. Some investment advisors may also be subject to the Massachusetts Identify Theft requirements for their Massachusetts clients.

For more information on any of these topics, please either complete the adjacent form or call us at (603) 430-8317.

Qualifications and Exam Requirements

What exams are required to become an IAR?
To establish an investment advisory firm, all individuals involved with providing investment advice to your clients must pass a Uniform Advisor Exam or qualify for an exemption. The exam options include the Series 65 (“Uniform Investment Advisor Exam”) and the Series 66 (Uniform Combined State Law Exam).

Advisor applicants who have an active Series 7 exam (no longer than 2 years unaffiliated with a broker-dealer), may opt for the Series 66 exam instead of the Series 65 exam. The Series 66 is narrower in scope and therefore less difficult.

Do I need to be sponsored by a broker-dealer to take the Series 65 or Series 66 exam?
No. You do not need to be sponsored by a broker-dealer to take the Series 65 or Series 66 exams. These exams were developed by the North American Securities Administrators Association (“NASAA”) to test competency. The exams are only administered through FINRA.
Are there exemptions to the Series 65 or Series 66 exam?
Yes. Certain professionals designations, held in good standing and reported to FINRA, such as Certified Financial Planner (“CFP”), Chartered Financial Analyst (“CFA”), Personal Financial Specialist (“PFS”), Chartered Financial Consultant (“ChFC”) or Chartered Investment Counselor (“CIC”) will typically enable an advisor to request an exemption from the exam requirements in many states.

The applicant is still required to apply for registration as an IAR by filing a Form U4 and paying the associated registration fees to the applicable state securities regulator.

To discuss your unique situation, please either complete the adjacent form or call us at (603) 430-8317.

Will my current firm be aware that I am taking this exam?
If you are currently a registered representative of a broker dealer, FINRA requires that you register for the Series 65 or Series 66 exam through your broker dealer.

To discuss your unique situation, please either complete the adjacent form or call us at (603) 430-8317. All inquiries are held in strict confidence.

 

Registering for the Exam

How do I register for an exam?
If you are not an active registered representative of a broker dealer, you must complete a Form U-10 and submit the form to FINRA in order to register for the Series 65 or Series 66 exam. Submission can be either completed and paid online or printed and mailed along with a check or money order directly to FINRA.
When can I take an exam? How long do I have to schedule the exam?
You may schedule your examination immediately following the opening of your examination window (“enrollment period”). Once FINRA processes your Form U-10, they will notify you of your enrollment period which is 120 days (4 months). Upon receipt of your enrollment confirmation from FINRA, you may contact a testing center in your area to schedule the exam.

You may only take an examination once per enrollment. If you do not pass the exam, you may re-submit a Form U-10 after a 30 day waiting period along with the fee, for re-testing.

How much does an exam cost?
The Series 65 exam costs $135 and the Series 66 exam costs $128. Fees are non-refundable by FINRA (FINRA administers the testing process on behalf of NASAA).
Where can I take the exam?
There are testing facilities near all major cities and through the United States (and some international as well). Testing Centers are sub-contracted through PearsonVUE Professional Centers or Prometric Testing Centers.
What days of the week can the test be taken?
The exam can typically be taken Monday through Saturday. Contact the appropriate testing center for exact availability.

 

Preparing for the Exam

What topics are covered on the exams?
The Series 65 exam consists of 130 questions (plus 10 pre-test questions) covering relevant topics around providing investment advice to clients, such as Economics, Investment Vehicles, Investment Recommendations and Strategies, and Legal and Regulatory Practices. Applicants are allowed 180 minutes to complete the examination.

Click here for the NASAA Series 65 Study Guide.

The Series 66 exam consists of 100 questions (plus 10 pre-test questions) covering relevant topics around providing investment advice to clients, such as Economics, Investment Vehicles, Investment Recommendations and Strategies, and Legal and Regulatory Practices. Applicants are allowed 150 minutes to complete the examination.

Click here for the NASSA Series 66 Study Guide.

What study options are available?
There are several providers of training materials and classroom studies, including reference books, practice tests, and other materials.

Please contact us by either completing the adjacent form or call us at (603) 430-8317.

 

Taking the Exam

What score must be obtained to pass?
For the Series 65 exam, a score of 72% or greater (94 of 130 questions correct) is required to pass. For the Series 66 exam, a score of 75% or greater (75 of 100 questions correct) is required to pass.

However, some states do require certain scores of up to 85% to be eligible for registration as an IAR. Note that the Series 65 exam and the Series 66 exam have 140 and 110 questions, respectively, but 10 of the questions do not count towards your scoring.

Must I complete each question in order?
No. You have the full allotted time for each exam to complete and review the questions. You may change any answer prior to submitting your exam for completion.
When will I know if I passed?
At the completion of the exam, the computer will display your score. Make sure you obtain a copy of your score from the testing center administrator before leaving.
What do I need to do if I do not pass?
If you do not receive a passing score, you must file a new Form U-10 and pay the exam fee to reopen the exam window. You must schedule the new exam at least 30 days from the date of the failed exam. If you do not pass on the 3rd attempt, you must wait 180 days for re-testing.

AdvisorGuidance can assist with any of your questions, whether related to the registration process or ongoing compliance services.

Please contact us at (603) 430-8317 and one of our experienced professionals will take you through the process so you have a good understanding of to begin your new advisory firm.

Ongoing Compliance

Who is responsible for my firm’s ongoing compliance requirements?
Your Chief Compliance Officer (“CCO”) has the responsibility of monitoring and making sure your firm’s ongoing compliance requirements are met.
How often do I need to amend my Form ADV Part 1?
Your Form ADV Part 1 needs to be amended at least on an annual basis. However, during the year if your business model changes, you may be required to amend your Form ADV Part 1 as well as your ADV Part 2 Brochure and Brochure Supplement.
How do I file an amendment to my Form ADV Part 1?
You file all amendments to your Form ADV Part 1 on the Investment Advisor Registration Depository (“IARD”) system.
Do I have to amend my Form ADV Part 2 Brochure and Brochure Supplement?
You are required to update your Form ADV Part 2 annually to make sure the information is still current, and deliver the updated Part 2 to your clients within 120 days of your year-end. If your information changes after your annual review, you may need to amend your document on an interim basis as well.
Are there any annual filing requirements?
Annually, you are required to submit an annual updating amendment to your Form ADV Parts 1 and 2 on the IARD system.
Do I have to file anything if my firm hires an individual to provide investment advice to clients?
Most states require firms to file a Form U4 for your Investment Advisor Representatives (“IAR”) who will be providing investment advice to your clients. This is true for both state and SEC registered investment advisor firms. Brochure Supplements (part of your Form ADV Part 2) need to be prepared for each IAR and delivered to the clients they provide advice to and meet with.
How do I schedule an exam for an individual in my firm?
You can open a window to schedule an exam for an individual by checking the appropriate exam on the Form U4 for the individual and paying the exam fee to your firm’s daily account. The Form U4 will need to be submitted on the CRD system.
Do I have to review my compliance policies and procedures?
Yes. Investment Advisors are required to test and review their policies and procedures on an annual basis in an effort to confirm that any risks have been addressed and mitigated and that the firm’s policies and procedures are still current and appropriate for the size and scope of the firm.
Are there any required documents that I need to keep for my firm?
Investment Advisors are subject to the books and records requirements of either the Investment Advisers Act of 1940 for SEC registered advisors; or, subject to the state requirements of their home state where their firm is currently registered.

Private Fund Management

Who is responsible for my firm’s ongoing compliance requirements?
Your Chief Compliance Officer (“CCO”) has the responsibility of monitoring and making sure your firm’s ongoing compliance requirements are met.
How often do I need to amend my Form ADV Part 1?
Your Form ADV Part 1 needs to be amended at least on an annual basis. However, during the year if your business model changes, you may be required to amend your Form ADV Part 1 as well as your ADV Part 2 Brochure and Brochure Supplement.