This how-to guide will provide instructions on becoming a financial advisor in Texas by either registering an independent investment adviser (IA) firm, or by registering as an investment adviser representative (IAR) of a firm already working with clients in Texas. Follow this guide to register at the state level with the Texas State Securities Board or at the federal level with the Securities and Exchange Commission (SEC).
The Texas Securities Act details the laws under which all investment adviser firms, principals, and representatives operate.
Step 1. Get Your Education
Get a degree that prepares you with the knowledge of financial markets necessary to provide clients with sound advice. Most professionals working in this field hold a four-year degree. Investment adviser firm principals and representatives will have their educational backgrounds made available to the public through the Investment Adviser Public Disclosure (IAPD) database, which is yet another reason to consider an appropriate degree:
- BA-Consumer and Family Financial Services
- BA-Accounting
- BS-Accounting
- MBA –Finance or Accounting
- MBA-Accounting and Finance
- MS-Accounting
- MS-Personal Financial Planning
- MS-Finance
- PhD-Accounting or Finance
Courses you can expect to encounter in your degree program include:
- Business law
- Quantitative business applications
- Economics
- Accounting
- Statistics
- Behavior of organizations, persons and groups
- Computer information systems
- Management
- Finance
- Ethics
- Marketing
- Business communications
- Taxation
A great way to make a positive addition to your resume is by testing for a voluntary professional certification. There are eligibility requirements to consider; the first being that you will need to have a minimum of a bachelor’s degree or an acceptable level of industry experience. As you begin your career, consider one of the following elective designations:
- Chartered Financial Consultant (ChFC)
- Personal Financial Specialist (PFS)
- Chartered Financial Analyst (CFA)
- Chartered Investment Counselor (CIC)
- Certified Financial Planner (CFP)
Step 2: Register Your Firm in Texas
(This step is only required if you are establishing a new IA firm in Texas. If your career will begin with a firm already registered in the state, skip to Step 3.)
If your investment adviser firm manages more than $100 million in client assets, it will be federally registered with the Securities and Exchange Commission (SEC). If your firm will manage something less than this, registration will be at the state level through the Texas State Securities Board. The following will explain the federal and state registration process, which in Texas are both completed electronically through the Investment Adviser Registration Depository (IARD).
- Complete and Submit Entitlement Forms (Section 3) specific to your new firm. You will assign yourself or a selected member of your staff the role of Super Accountant Administrator (SAA). The SAA will receive login information granting access to the Firm Gateway, which will allow the following steps to be completed.
- Fund the IARD User Account. All registration, testing, and filing fees are paid through your firm’s IARD User Account. It is the responsibly of the firm to ensure that the account is adequately funded to cover:
- $285 initial Texas filing fee for each IAR in the firm
- The exam fees for each new-register IAR in the firm
- $275 initial Texas IA firm filing fee
- Complete and electronically submit Form ADV. This form requires that all relevant employee data is annotated, as well as the firm’s fee structure and investment criteria. This form is made available to prospective clients.
- Submit Form U-4 Uniform Application for Securities Registration or Transfer for each new IAR employed by the firm.
- Send the following documents to the Texas State Securities Board, P.O. Box 13167, Austin, Texas 78711-3167:
- Corporate or partnership organizational documents
- Copies of your fee schedule and any other agreements you will use with clients
- A balance sheet
Step 3: Take the Required Exam(s)
You are exempt from taking exams if you’ve earned any these professional designations:
- Certified Financial Planner (CFP)
- Chartered Investment Counselor (CIC)
- Personal Financial Specialist (PFS)
- Chartered Financial Analyst (CFA)
- Chartered Financial Consultant (ChFC)
- Prepare to take the required exam(s)
OR
- The Series 7, General Securities Representative Examination (requires FINRA-member firm sponsorship) and the Series 66, Uniform Combined State Law Examination
Apply using one of this form:
- Form U-4 Uniform Application for Securities Industry Registration or Transfer will meet the state/federal registration application requirement as well as the exam application requirement.
- Schedule the exam(s). Exams are scheduled are administered through the Prometric or Pearson Professional Center testing locations in Texas.
- Plan on arriving at the test site before your scheduled exam time on the appropriate day.
- Exam scores are released to the IAR candidate immediately after test completion.
- Take the exam covering the Texas Securities Act. This is a requirement for becoming licensed in Texas. The fee for this exam is $35. You will be allowed to have a copy of the Texas Securities Act with you during this test. Call the Registration Division at (512) 305-8300 to schedule this exam.
Step 4: Ongoing Renewal and Update Requirements in Texas
Investment Advisor Firm:
You will use the Investment Adviser Registration Depository (IARD) to complete Texas registration renewals for your firm and for all IARs in your employ by the December 31st deadline each year. Expect to pay the following fees:
- Texas’s renewal fees of $270 for firms and $275 for each individual IAR within the firm
- Renewal fees for every state that your firm or the IARs in your firm have clients
- Yearly IARD administrative renewal fees of $100
Investment Adviser Representatives:
Form U-4 must be kept current year round. IARs must alert their firm’s Super Account Administrator within 30 days of the occurrence of or changes to the following:
- Name change, including a change caused by marriage
- Complaints for a client
- Certifications added
- Educational degrees
- Additional unrelated or related business activities
- Civil judgments against you
- Primary residence
- Disciplinary action
- Criminal charges or convictions