Investment Advisor Registration

Investment advisors play an important part in ensuring that our financial systems run smoothly and are as profitable as possible for investors. Investment Advisors are required to register with the Security and Exchange Commission, since they advise the public regarding the sale and purchasing of securities.

Who Are Investment Advisors?

Investment Advisors are specifically designated and defined under Section 202(a) (11) of the Investment Advisors Act of 1940:
“any person who, for compensation, engages in the business of advising others, either directly or through publications or writings, as to the value of securities or as to the advisability of investing in, purchasing or selling securities, or who, for compensation and as part of a regular business, issues or promulgates analyses or reports concerning securities.”

Why Investment Advisor Registration Is Required

Investment Advisors have access to sensitive personal information, including bank account information and individual social security numbers. By law, anyone who has access to this information and uses it in the pursuit of providing financial advice must register with the SEC using the Investment Advisor Registration Directory (IARD).

About The Investment Advisor Registration Depository

The IARD is sponsored by the Security and Exchange Commission (SEC) and the North American Securities Administrators Association (NASAA).

The Investment Advisor Registration Depository maintains all registration and disclosure information for Investment Advisors and their associates. Federal law mandates that electronic filing and public disclosure regarding all Investment Advisors be available, and many states have similar requirements. The IARD satisfies those legal requirements.

How To Become A Registered Investment Advisor

Normally, firms are registered as investment advisors either with the SEC, or in individual states. This is highly dependent on the amount of securities they handle as well as the regulations within individual states. This is a highly subjective process, so review the regulations for the state in which your company is located as well as any other states in which you conduct business.
There are exemptions for private advisors, however designation as a private advisor means that an individual or corporation must fly under the public radar and NOT actively seek new clients. Most financial professionals do not fall into this category, nor do they wish to.

Securities examinations are required as part of the Investment Advisor registration and licensing process. These examinations vary state by state.

You must also set up an IARD account as explained above and complete an application (the application you fill out will depend on your state, also.) Once you have done that, your application will be reviewed and/or revised.

Be sure that you follow all federal, state and local regulations if you are conducting any type of business that involves investment advisor activity as defined by the Investment Advisors Act of 1940 mentioned earlier. Now more than ever, laws are being enforced in an effort to keep all Investment Advisors working in an honest and aboveboard fashion.

Investment Advisor Registration is a necessary part of a rewarding career.