How to Become a Registered Independent Investment Adviser
A registered investment adviser, or RIA, is an independent individual or company that provides investment advice and management for its clients. The RIA business model is more focused on taking care of clients' overall investment plan than the product-selling focus of an investment representative at a stock brokerage firm. A new registered investment adviser typically has been working in the investment business and has a book of clients that form the basis of the new RIA business.
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Instructions
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Determine if you have a current or prospective client base to meet the Securities and Exchange Commission requirements to become a registered investment adviser. The SEC rules require an RIA to have at least $25 million of assets under management. A new adviser has 120 days after becoming registered to reach the minimum amount of managed money.
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Complete and submit a Form ADV to the SEC through the Investment Adviser Registration Depository website. Form ADV has two parts, both of which must be submitted electronically. Part 1 requires information about your proposed RIA business and details concerning your experience in the financial services industry. Part 2 is a disclosure about your business practices, what fees you will charge and any conflicts of interest, such as commissions to be earned from investment products used or recommended.
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Schedule and pass the Series 65 Uniform Investment Adviser Law test. The test is administered by the Financial Industry Regulatory Authority, or FINRA. If you already have an advanced adviser designation in good standing, such as Certified Financial Planner (CFP), Chartered Financial Consultant (ChFC) or Chartered Financial Analyst (CFA), the Series 65 is not necessary.
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Establish a relationship with a broker or dealer firm to allow you to sell securities as part of your business or a discount brokerage firm to act as custodian of your client's invested assets. The choice depends on the fee or commission structure you have decided on for your RIA business.
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Tips & Warnings
The majority of individuals who set up a individual RIA have experience in the financial services industry in a job such as money manager or investment representative.
The SEC must make a decision to approve or decline an RIA Form ADV application within 45 days of submission. The training and background you submit on Part 1 of the ADV are the factors that determine whether the RIA registration is approved.
