RIA Registration & Compliance Glossary

Advertising & Marketing Compliance

Compliance Review of Marketing Materials

A compliance review of marketing materials is the internal process an RIA uses to check advertising content — websites, social posts, pitch decks, and client communications — against Marketi…

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Advertising & Marketing Compliance

Hypothetical Performance

Hypothetical performance is investment performance that wasn't actually achieved by any client — including backtested results, model portfolios, and projected returns. The Marketing Rule pla…

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Advertising & Marketing Compliance

Performance Advertising

Performance advertising refers to any marketing material that presents an adviser's actual investment returns or track record. The Marketing Rule requires this data to be presented net of fe…

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Advertising & Marketing Compliance

SEC Marketing Rule (Rule 206(4)-1)

The SEC Marketing Rule (Rule 206(4)-1) is the regulation governing how registered investment advisers can advertise their services, including rules on testimonials, endorsements, third-party…

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Advertising & Marketing Compliance

Testimonials and Endorsements

A testimonial is a statement by a current client or investor about their experience with an adviser; an endorsement is a similar statement by someone who isn't a client, such as an influence…

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Advertising & Marketing Compliance

Third-Party Ratings

A third-party rating is a rating, ranking, or award assigned to an adviser by an independent organization — such as "Best RIA" lists or industry award programs. The Marketing Rule allows adv…

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Annual Compliance & Filings

Amendment Filing (Material vs. Annual)

A Form ADV amendment is an update to a firm's registration filing. There are two types: the required annual amendment, filed within 90 days of fiscal year-end, and a material amendment, file…

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Annual Compliance & Filings

Annual Compliance Review (Rule 206(4)-7)

The annual compliance review is a required yearly assessment of an investment adviser's compliance policies and procedures, evaluating their adequacy and effectiveness in light of the firm's…

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Annual Compliance & Filings

Business Continuity Plan (BCP)

A Business Continuity Plan (BCP) is a written plan describing how an investment adviser will continue operating and protect client interests during a significant disruption — such as a natur…

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Annual Compliance & Filings

Code of Ethics

A Code of Ethics is a required written policy setting standards of business conduct for an investment adviser's supervised persons, including rules on personal securities trading, gifts and…

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Annual Compliance & Filings

Compliance Program

A compliance program is the complete set of policies, procedures, and oversight practices an investment adviser adopts to prevent, detect, and correct violations of securities laws — require…

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Annual Compliance & Filings

Custody Rule (Rule 206(4)-2)

The Custody Rule (Rule 206(4)-2) imposes safeguards on investment advisers that have custody of client funds or securities, including a requirement to use a qualified custodian, ensure clien…

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Annual Compliance & Filings

Privacy Policy (Regulation S-P)

A Regulation S-P privacy policy is the required client-facing notice explaining what nonpublic personal information a firm collects, how it's used, and under what circumstances it may be sha…

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Annual Compliance & Filings

Proxy Voting Policy

A proxy voting policy is a written policy describing how an investment adviser votes proxies on behalf of clients when it has been granted that authority — including how voting decisions are…

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Annual Compliance & Filings

Written Supervisory Procedures (WSPs)

Written Supervisory Procedures (WSPs) are the internal policies an investment adviser adopts to ensure the firm and its personnel comply with securities laws — covering areas like trading, a…

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Assets & Reporting Concepts

Assets Under Advisement (AUA)

Assets Under Advisement (AUA) refers to assets on which a firm provides advice or recommendations but doesn't have discretionary management authority or ongoing supervisory responsibility —…

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Assets & Reporting Concepts

Assets Under Management (AUM)

Assets Under Management (AUM) refers to the total market value of client assets an investment adviser manages on a discretionary or non-discretionary basis. It's a common industry metric use…

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Assets & Reporting Concepts

Client Reporting Requirements

Client reporting requirements are the rules governing what information an investment adviser must provide clients about their accounts — including account statements, and in some cases, disc…

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Assets & Reporting Concepts

Regulatory Assets Under Management (RAUM)

Regulatory Assets Under Management (RAUM) is the specific AUM calculation the SEC requires advisers to report on Form ADV, using a defined methodology that can differ from how a firm calcula…

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Cybersecurity & Data Compliance

Cybersecurity Policy

A cybersecurity policy is a written program describing how an investment adviser protects client data and firm systems from unauthorized access, breaches, and other security incidents — cove…

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Cybersecurity & Data Compliance

Cybersecurity Risk Assessment

A cybersecurity risk assessment is a systematic review of an investment adviser's technology systems, data handling practices, and vendor relationships to identify vulnerabilities that could…

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Cybersecurity & Data Compliance

Data Breach Notification Requirements

Data breach notification requirements are the rules governing what an investment adviser must do after a security incident exposes client information — including notifying affected clients,…

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Cybersecurity & Data Compliance

Regulation S-P

Regulation S-P is the SEC rule requiring registered investment advisers to adopt written policies protecting the privacy and security of clients' nonpublic personal information, and to provi…

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Examinations & Regulatory Readiness

Books and Records Rule (Rule 204-2)

The Books and Records Rule (Rule 204-2) is the SEC regulation specifying which records registered investment advisers must create and retain, including financial records, client communicatio…

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Examinations & Regulatory Readiness

Deficiency Letter

A deficiency letter is a formal notice issued by a regulator (the SEC or a state securities division) after an examination, identifying compliance issues the adviser needs to address — typic…

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Examinations & Regulatory Readiness

Document Request List

A document request list is the itemized list of records and materials a regulator asks an adviser to produce at the start of an examination — commonly including compliance policies, client a…

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Examinations & Regulatory Readiness

Mock Examination

A mock examination is a simulated regulatory exam — conducted by an outside compliance consultant — that walks a firm through the same document requests, interviews, and review process a rea…

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Examinations & Regulatory Readiness

SEC Examination

An SEC examination is a review conducted by the SEC's Division of Examinations to assess whether a registered investment adviser is complying with securities laws and its own stated policies…

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Examinations & Regulatory Readiness

State Examination

A state examination is a compliance review conducted by a state securities regulator for advisers registered at the state level rather than with the SEC. The process is similar in structure…

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Fees & Cost Structures

Annual Renewal Fee

The annual renewal fee is the yearly payment investment advisers make through the IARD system to maintain active registration, covering both the IARD processing fee and any applicable state…

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Fees & Cost Structures

IARD System Fee

The IARD system fee is the processing fee charged for filing and maintaining Form ADV through the Investment Adviser Registration Depository. The amount generally scales with the firm's repo…

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Fees & Cost Structures

State Notice Filing Fee

A state notice filing fee is a fee paid by SEC-registered investment advisers to individual states where they have clients, even though the firm isn't registered at the state level. It cover…

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Firm Roles & Structure

Access Person

An access person is a supervised person who has access to nonpublic information about client securities transactions or holdings, or who is involved in making investment recommendations. Acc…

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Firm Roles & Structure

Chief Compliance Officer (CCO)

A Chief Compliance Officer (CCO) is the individual designated by a registered investment adviser to administer its compliance program, including its written supervisory procedures and code o…

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Firm Roles & Structure

Control Person

A control person is anyone who directly or indirectly has the power to direct the management or policies of an investment adviser, whether through ownership, contract, or other means. Contro…

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Firm Roles & Structure

Promoter

A promoter — the term the Marketing Rule uses in place of the older "solicitor" language — is any person compensated for referring clients to an investment adviser, or who otherwise endorses…

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Firm Roles & Structure

Related Person

A related person is any advisory affiliate of the firm — including officers, directors, employees, and entities under common control — whose relationship with the adviser could present a con…

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Firm Roles & Structure

Supervised Person

A supervised person is any partner, officer, director, or employee of an investment adviser, or any other person who provides advice on the adviser's behalf and is subject to the adviser's s…

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Professional Credentials & Licensing

Certified Financial Planner (CFP)

Certified Financial Planner (CFP) is a professional certification for financial planners, awarded by the CFP Board after candidates complete required coursework, pass a comprehensive exam, m…

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Professional Credentials & Licensing

Certified Investment Management Analyst (CIMA)

The Certified Investment Management Analyst (CIMA) is a professional designation focused on advanced investment consulting and portfolio construction, awarded to candidates who complete an e…

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Professional Credentials & Licensing

Continuing Education (CE) Requirements for IARs

Continuing education (CE) requirements for investment adviser representatives are annual training obligations — covering ethics and products/practices topics — adopted by a growing number of…

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Professional Credentials & Licensing

Series 63

The Series 63 is the Uniform Securities Agent State Law Exam, required in most states for individuals selling securities as agents of a broker-dealer. It covers state securities law and ethi…

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Professional Credentials & Licensing

Series 65

The Series 65 is the Uniform Investment Adviser Law Exam, the most common qualification exam for individuals seeking to register as investment adviser representatives. It covers investment c…

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Registration & Formation

De Minimis Exemption

The de minimis exemption allows an investment adviser to avoid registering in a particular state if the firm has fewer than a specified number of clients residing there — commonly five or fe…

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Registration & Formation

Form ADV

Form ADV is the registration and disclosure document every investment adviser must file with the SEC or state securities regulators. It discloses the firm's business practices, fees, conflic…

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Registration & Formation

Form ADV Part 1

Form ADV Part 1 is the structured-data section of Form ADV, containing firm-level information regulators use for oversight purposes — including ownership structure, assets under management,…

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Registration & Formation

Form ADV-W (Withdrawal)

Form ADV-W is the form an investment adviser files to formally withdraw its registration with the SEC or a state, typically when the firm ceases operating as an investment adviser, merges in…

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Registration & Formation

Form U-4

The Form U-4 is the Uniform Application for Securities Industry Registration, filed for individuals seeking to register as investment adviser representatives or broker-dealer agents. It disc…

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Registration & Formation

Form U-5

Form U-5 is the Uniform Termination Notice for Securities Industry Registration, filed by a firm when an individual's registration as an investment adviser representative or broker-dealer ag…

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Registration & Formation

IAR Qualification Requirements

IAR qualification requirements are the exam or designation paths an individual must satisfy to register as an Investment Adviser Representative — most commonly passing the Series 65, or the…

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Registration & Formation

IARD/CRD

The Investment Adviser Registration Depository (IARD) is the electronic system used to file and maintain Form ADV, while the Central Registration Depository (CRD) is the broader system that…

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Registration & Formation

Investment Adviser Representative (IAR)

An Investment Adviser Representative (IAR) is an individual who provides investment advice on behalf of a registered investment adviser and is subject to the firm's supervision. IARs must me…

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Registration & Formation

Legal Entity Formation

Legal entity formation is the process of establishing a firm's business structure — most commonly as an LLC or a corporation — before it registers as an investment adviser. The choice affect…

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Registration & Formation

Surety Bond

A surety bond is a financial guarantee some states require investment advisers to maintain as a condition of registration, providing a source of recovery for clients if the firm engages in c…

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Regulators & Filing Systems

CRD Number

A CRD number is the unique identification number assigned to an investment adviser firm or individual representative within the Central Registration Depository system, used to track registra…

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Regulators & Filing Systems

Investment Adviser Public Disclosure (IAPD)

Investment Adviser Public Disclosure (IAPD) is the public-facing website where anyone can search and view an investment adviser's Form ADV filings, including firm and individual representati…

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Regulators & Filing Systems

North American Securities Administrators Association (NASAA)

The North American Securities Administrators Association (NASAA) is the organization representing state, provincial, and territorial securities regulators across the U.S., Canada, and Mexico…

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Regulators & Filing Systems

State Securities Regulator (Division of Securities)

A state securities regulator — often called a division of securities or department of financial regulation — is the state-level agency responsible for registering and overseeing investment a…

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Regulators & Filing Systems

U.S. Securities and Exchange Commission (SEC)

The U.S. Securities and Exchange Commission (SEC) is the federal agency responsible for regulating securities markets and, for investment advisers, overseeing firms that manage roughly $100…

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