The term financial advisor is commonly used to describe licensed and registered investment adviser representatives (IARs) or sole proprietors of investment adviser (IA) firms. The following information provides a step-by-step explanation of how to become an IAR for an existing firm as well as how to establish your own investment adviser (IA) firm in Nevada. This covers the state level process for IAs and IARs who register with the Nevada Securities Division as well as those that are federally registered with the Securities & Exchange Commission (SEC).
Step 1. Get Your Education
Choose the right degree. The Investment Adviser Public Disclosure (IAPD) registry contains all educational information on registered IARs and sole proprietors of investment adviser firms. Potential clients use the IAPD as they work to determine which adviser to go with. It is very common to see advisers with specialized degrees. In most cases you won’t find anyone offering financial planning or advisory services that doesn’t hold a four-year degree or higher.
Among the specialized degrees that are recommended are:
- BA or BS -Accounting
- BA-Consumer and Family Financial Services
- MBA-Accounting and Finance or simply Finance
- MS-Accounting, Personal Financial Planning, or Finance
- PhD-Accounting or Finance
Make the right course selections. Efficiently advising clients regarding their finances requires a strong educational background and real world experience. Numerous courses are available to assist you in becoming an expert adviser:
- Computer information systems
- Business law
- Taxation
- Accounting
- Management
- Economics
- Business communications
- Statistics
- Behavior of groups, persons, and organizations
- Ethics in business
- Marketing
- Finance
- Quantitative applications applied to business
Consider a professional designation. Although professional certification is not a requirement for either state or federal IAR registration, it is still quite beneficial. In order to test for a professional certification, all eligibility requirements need to be met. These requirements include a bachelor’s degree or a minimum level of industry experience. Suggested certifications for financial advisors:
- Personal Financial Specialist (PFS)
- Certified Financial Planner (CFP)
- Chartered Investment Counselor (CIC)
- Chartered Financial Consultant (ChFC)
- Chartered Financial Analyst (CFA)
Step 2: Register Your Firm in Nevada
(This step is only applicable if you are establishing your own IA firm. If you intend to work with an established firm, skip to Step 3.)
Once the decision has been made to open an independent firm, you will need to begin the Investment Advisor (IA) registration process through the FINRA administered Investment Adviser Registration Depository (IARD). State level registration with the Nevada Securities Division, will be finalized once you have completed all necessary steps. If your firm will be managing assets greater than $100 million then it will be registered at the federal level with the SEC. The following steps cover both.
- Open an IARD User Account by completing the Entitlement Forms for your New Investment Advisor Firm (Section 3). This is the first step in the FINRA Entitlement Process. This will allow you access to FINRA’s Web-based systems. Your firm will be responsible for assigning somebody the role of Super Accountant Administrator (SAA). The SAA will be able to access the FINRA Firm Gateway and begin the process of completing the remaining steps.
- Fund the IARD User Account. The IARD User Account is funded to cover all required fees:
- Initial IARD set up fees for state registered investment advisors are currently being waived
- $300 initial state firm filing fee that is charged by the Nevada Securities Division
- $225 initial filing fee for SEC-registered advisors, which include firms with over $100 million in assets under management
- Exam fees for each IAR that will be in the firm
- $110 initial state IAR filing fee that is charged by the Nevada Securities Division for each IAR that will be employed by the firm
- An electronic version of Form ADV will be completed in the IARD. This form outlines the new IA firm’s investment philosophy, background of investment advisors, and fee structure.
- Each investment advisor representative (IAR) in the firm will need to submit a U-4 Uniform Application for Securities Registration or Transfer form. As a representative of your own firm, you and required to submit the Form U-4 for yourself.
Requirements to Transact Business in Other States
The new firm may transact a small amount of business in another state after all registration steps have been completed in Nevada, as long as there are no more than four clients in any one state. If working with more than four clients in any one state, you must register in that state using the IARD system and pay that state’s required registration fees.
Under the De Minimis Exemption, properly registered RIAs from another state are permitted to transact a minimal amount of business in Nevada and are only required to register with Nevada when their sixth client is added.
Step 3: Get Your Registered Investment Adviser License in Nevada by Taking the Required Exam
The Nevada Securities Law covers all firms that offer a majority of their services to clients living in Nevada and that manage assets less than $100 million. The Securities and Exchange Commission (SEC) oversees firms that manage more than $100 million in assets. The state of Nevada and the SEC will waive exam requirements for professionals who have achieved one of the following professional designations:
- Chartered Financial Analyst (CFA)
- Chartered Investment Counselor (CIC)
- Certified Financial Planner (CFP)
- Chartered Financial Consultant (ChFC)
- Personal Financial Specialist (PFS)
- Nevada’s requirement is that all IAR candidates register for and complete one of the following:
OR
- The Series 7, General Securities Representative Examination, which will require sponsorship through a FINRA-member firm, in combination with the Series 66, Uniform Combined State Law Examination
Register for the exams:
- 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 and exam application.
- Schedule any required exam(s) through one of the Prometric or Pearson Professional Center testing locations in Nevada. You must schedule the exam(s) within 120 days of registration. Only one exam may be scheduled for any given day.
- Arrive at the testing center at least one hour prior to your scheduled exam time on the appropriate day.
- Exam scores are available immediately after the exam is complete.
Step 4: Ongoing Renewal and Update Requirements in Nevada
Investment Advisor Firm:
- IARD renewal fees are $100
- Nevada’s renewal fees are $300 for the firm
- Nevada’s renewal fees are $110 for each IAR employed by the firm
- Annual updates to the ADV will always be required
- License renewal must take place on or before December 31st every year
- Renewal fees are paid for all states where IARs are registered
- IAR license and IA firm renewals will be completed through the IARD
Investment Adviser Representatives:
The firm’s Super Account Administrator (SSA) should maintain a current Form U-4 for all representatives of the firm. Sole proprietors will make all necessary changes to their own file, but employees of a firm will notify their SAA of the need to make amendments within 30 days of changes to the following:
- Customer complaints
- Education
- Residential address
- Criminal record
- Jurisdictional changes
- Name change (marriage)
- Disciplinary action
- Civil judgments
- Certification
- Additional business activities