What is a Registered Investment Advisor?
Individuals and firms that manage assets for fees are referred to as Registered Investment Advisers. There are some basic areas that Registered Investment Advisors cover and a few different levels in obtaining the designation. While there isn't an education degree requirement, those seeking to become a Registered Investment Adviser must meet regulations to become registered. Dealing with money management requires following the strictest of regulations on state and federal levels.
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Defintion
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A Registered Investment Adviser is a person or firm that manages the assets of other individuals or organizations. They function as fiduciaries on behalf of advisory clients obligated to act in the client's best interest always. They must follow the Advisers Act and maintain compliance programs to adhere to the rules and regulations defined in the Act. Registered Investment Advisers are governed at the state level by the Financial Investment Regulatory Authority (FINRA) and the Securities Exchange Commission (SEC) nationally.
Series 65
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A Registered Investment Adviser gains this designation most readily via passing the Series 65 exam conducted by FINRA. The Series 65 is the "Registered Investment Adviser" exam and has become more popular in recent years as investment advisers seek to maintain assets as opposed to generate commissions. Once a person passes this exam, they are qualified to register with FINRA and the SEC.
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FINRA Registration
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FINRA is the regulatory body for all investments solicited and sold in the United States. Those who pass the Series 65 must become registered with a FINRA registered brokerage firm in the state of his or her residence as well as in all the states where they will conduct business. Without a valid registration, the adviser can face civil and criminal penalties for working as a Registered Investment Adviser.
SEC Registration
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There are specific reports that all Registered Investment Advisers must file with the SEC. They are not required to register directly with the SEC unless they manage more than $25 million in assets (as of 2009). Regardless of how much they manage, they are required to file annually an Investment Advisers Registration Depository detailing the total assets under management. Current contact information must also be maintained for the firm and the Registered Investment Adviser.
Other Careers That Gain Registration
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While most Registered Investment Advisers start with a Series 65, there are several professional designations that allow someone to become a Registered Investment Adviser. Certified Financial Planners, Chartered Investment Counselors and Chartered Financial Consultants may have the need for the Series 65 waived. Certified Public Accountants do not require registration.
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