Financial advisor is term most often used to describe licensed investment adviser representatives (IARs) or sole proprietors of investment adviser (IA) firms. This guide describes the step-by-step process by which you become an investment adviser representative and establish your own investment adviser firm in the state of Montana. With less than $100 million in client assets under management, you will be registered with the Montana Securities Department, and if assets under management are in excess of this, you’ll be registered with the Securities & Exchange Commission (SEC) at the federal level. This guide describes the process for both scenarios.
Step 1. Get Your Education
Get the right degree. The educational background information of all IARs is kept in a national registry. This permits clients to research your credentials before hiring you.
It’s not unusual to see advisors obtaining specialized degrees:
- BA-Consumer and Family Financial Services
- BA or BS -Accounting
- MBA-Accounting and Finance or simply Finance
- MS-Accounting, Personal Financial Planning, or Finance
- PhD-Accounting or Finance
Enroll in the right courses. As an IAR, you must be qualified to advise clients regarding investment options and their personal finances. In order to accomplish this, it’s crucial to seek a strong educational background. Relevant courses include:
- Marketing
- Ethics in business
- Business law
- Management
- Computer information systems
- Quantitative applications applied to business
- Accounting
- Taxation
- Business communications
- Statistics
- Finance
- Economics
- Behavior of groups, persons, and organizations
Professional certifications are often held by IARs. These designations are purely elective and are not state or federally mandated. These certifications often require a bachelor’s degree and denote an expert level of industry related knowledge:
- Certified Financial Planner (CFP)
- Chartered Financial Analyst (CFA)
- Chartered Investment Counselor (CIC)
- Chartered Financial Consultant (ChFC)
- Personal Financial Specialist (PFS)
Step 2: Register Your Firm in Montana
(This step is only applicable to those who will be establishing thier own IA firm. Those who will start their careers by working with an established firm can skip to Step 3.)
As long as your firm does not manage more than $100 million in total assets, it will be registered exclusively with the Montana Securities Department. If you choose to take on assets greater than $100 million, your firm will need to register at the federal level with the SEC. In both cases, investment adviser (IA) firm registration is done through the FINRA administered Investment Adviser Registration Depository (IARD).
- Begin the FINRA Entitlement Process. This involves completing the Entitlement Forms specific to the New Investment Advisor Firm and opens your IARD User Account (Section 3). The main purpose of this is to assist you in gaining access to FINRA’s Web-based systems. During this process, your firm will appoint a Super Accountant Administrator (SAA) who will have access to the FINRA Firm Gateway and have the ability to complete all remaining steps:
- Fund the IARD User Account with money sufficient to pay state and IARD filing fees, IAR registration and testing fees. Fees in Montana break down as follows:
- Exam fees for each IAR in the firm
- Initial IARD set up fees for state registered investment advisors are currently being waived
- $225 initial filing fee for SEC-registered advisors, which include firms with over $100 million in assets under management
- $50 initial state IAR filing fee that is charged by the Montana Securities Division for each IAR that will be employed by the firm
- $200 initial state firm filing fee that is charged by the Montana Securities Division
- Complete Form ADV electronically within the IARD. This form provides firm information to clients and regulators including investment philosophy, background of investment advisors, and fee structure.
- Fill out and submit a U-4 Uniform Application for Securities Registration or Transfer form for each IAR within the firm. This applies to sole proprietors as well, who will complete the form for themselves.
Requirements to Transact Business in Other States
Any properly registered Montana IA can transact a minimal amount of business in any other state; however, if the firm has more than four clients in any one state, the firm must register in that state using the IARD system and fund their account in order to pay that state’s required fees.
The De Minimis Exemption permits RIAs from another state to transact a small amount of business in Montana and only requires them to register in the event that a sixth Montana resident client is added.
Step 3: Get Your Registered Investment Adviser License in Montana by Taking the Required Exam
IA firms that offer most of their services to Montana based clients and that manage client assets less than $100 million operate under the governance of the Montana securities laws. The Securities and Exchange Commission (SEC) oversees firms that manage more than $100 million in client assets. The SEC will waive the exam requirements for professionals who have one of the following professional designations:
- Chartered Financial Analyst (CFA)
- Certified Financial Planner (CFP)
- Chartered Financial Consultant (ChFC)
- Personal Financial Specialist (PFS)
- Chartered Investment Counselor (CIC)
- Montana requires that IAR candidates register for and complete one of the following:
OR
- The Series 7, General Securities Representative Examination, which requires sponsorship through a FINRA-member firm, in combination with the Series 66, Uniform Combined State Law Examination
Register using one of the following forms:
- The Form U-4 Uniform Application for Securities Industry Registration or Transfer, should be prepared and submitted through the IARD. This form functions as both the registration application and as the IAR’s exam application.
- All exam(s) are scheduled through one of the Prometric or Pearson Professional Center testing locations in Montana. You need to schedule the exam(s) within 120 days of registration and cannot take more than one in exam in a single day.
- Arrive at the testing center at least one hour prior to your scheduled exam time on the appropriate day.
- Exam scores are distributed immediately after the exam is complete.
Step 4: Ongoing Renewal and Update Requirements in Montana
Investment Advisor Firm:
- License renewal actions must be completed by December 31st every year
- IARD renewal fees are $100
- Annual updates to the ADV will always be required
- Renewal fees are paid for all states where the firm’s IARs are registered
- Montana’s renewal fees are $200 for the firm and $50 for each IAR within the firm
Investment Adviser Representatives:
It is the responsibility of the IAR to maintain a current Form U-4. Sole proprietors will make all necessary changes to their own file, but employees of a firm will notify their SAA of any changes and they will have 30 days to update the information. A change in any of the following data will require an amendment to the Form U-4:
- Additional business activities
- Residential address
- Criminal record
- Disciplinary action
- Education
- Customer complaints
- Name change (marriage)
- Civil judgments
- Certification
- Jurisdictional changes