What does it take to achieve the status of a Registered Investment Advisor or an RIA? According to Investopedia, individuals who are eager to work as “independent financial advisors to individual investors, to manage assets and/or provide financial counsel,” typically must become a Registered Investment Advisor, also known as an RIA! Dissimilar to a financial planner, a much broader professional with no legal mandates for licensing and training, the path to assuming an RIA has very particular requirements.
First, you must pass the Series 65 exam, also called the Uniform Investment Advisor Law exam. This examination is handed out by the Financial Industry Regulatory Authority (FINRA), a self-regulating private establishment that composes and carries out the regulations governing registered brokers and broker-dealer companies within the United States. Nonetheless, test-takers are not demanded to be sponsored by a broker-dealer, as they are for most other securities-concerned exams given by FINRA.
Next, you must have registered with either the Securities and Exchange Commissions, SEC, or the state in which you would like to conduct business in. It’s vital to note that you do not have to offer investment services or advice is incidental to your future practice. Those who may be exempt from this step are engineers, attorneys, broker-dealers, teachers, publishers, accountants, workers from charitable organizations, advisors who operate with the U.S. government securities, and advisors who are currently registered with the Commodity Futures Trading Commissions and for whom offering investment advice is not a principal line of business.
Following, you must generate an account with the Investment Adviser Registration Depository, or IARD. Handled by FINRA on behalf of the SEC and states, the account will allow FINRA to supply the advisor or establishment with a CRD number and account ID details. Subsequently, the RIA can file Form ADV and the U4 forms with either the SEC or states.
Once you claim your title as a Registered Investment Advisor, it’s time to become bonded! Colonial Surety Company is the leading provider of registered investment advisors (RIA) bonds. Certain registered investment professionals are required by law to post an RIA bond with certain states. It is a contract whereby the surety agrees to have secondary responsibility to the state (the obligee) for certain defaults of the registered investment adviser (the principal). The RIA bond indemnifies the obligee for losses sustained due to any covered defaults, up to the amount of the bond. Colonial Surety Company offers a direct and digital way to obtain an RIA bond. We make it easy to obtain your bond instantly. The steps are simple—get a quote online, fill out your information, and enter your payment method. Print your bond from your home or office. It’s that easy! Click here to obtain your bond.