Previously we covered Investment Advisor Registration in our blog When Do You Have to Register as an Investment Adviser?, discussing what the Investment Advisors Act of 1940 defines as an investment advisor and what triggers the registration requirements. In this blog, we will focus on the exclusions from the definition of investment advisor at the federal and state level.
The Investment Advisers Act of 1940 defines an investment adviser as any person who, for compensation, engages in the business of advising others as too the value of securities or the advisability of investing in securities or, as part of regular business, issues analyses or reports concerning securities. So when do you have to register as an investment adviser? Any person who is considered an investment adviser will be subject to the Investment Adviser Act of 1940 and be required to register with either the SEC or the States. A person would be considered an investment adviser if they engaged in these three activities:
In mid-December, the CFP Board redesigned their consumer facing website, LetsMakeAPlan.org, to include updated content and a modernized interface with a mobile friendly design to improve user experience, educate consumers on financial planning concepts, and provide resources to find and evaluate CFP professionals. The CFP Board partnered with Heart + Mind Strategies LLC to conduct an intensive consumer research study from June-September 2020 to inform the redesign of the website. From their findings, the Board concluded that “consumers preferred that LMAP provide content that enables them to gain a better understanding about financial planning, information on how to evaluate the best way forward with a financial professional, and guidance in searching for a CFP professional that fits their circumstances. From this research, the Board”.
Individuals looking to be in the business of giving investment advice for compensation will most likely need to register as an investment advisor representative (“IAR”). There are a couple of differences between becoming an IAR and a registered investment advisor(“RIA”). Most notably, only a natural person (a human being and not an entity) can be considered and IAR, and IARs never register with the SEC, only with the individual states. For an example of how to register with a state, check out the process for registering as an IAR with the state of Georgia on the Georgia Secretary of State’s website.
MasterCompliance continues to provide clients and the public with guidance on industry focus areas, new rules, compliance foundations, and regulatory priorities. This blog explores our top 5 blogs of 2020.
Failure to timely update information on an individual form U4 may lead to potential fines and suspensions for a registered person, especially if the act is willful. Examinations and sweeps performed by FINRA generally reveal exceptions.