Comments on: Investment Advisor Search – Day 3 – Registered Investment Advisers

By: Dylan

Dylan — Fri, 21 Aug 2009 19:15:41 +0000

You are correct, it is prohibited. Such an agent would be required to register as an investment adviser if the advice they provide is covered under the Investment Adviser Act of 1940 or their state’s equivalent laws. But, once they are registered, they may receive commissions and provide advice.

I am the Chief Compliance Officer of a Registered Investment Adviser firm. This may sound impressive to your readers, but it’s not. I am a solo CFP® practitioner, but because my practice is an RIA and it’s just me and RIAs are required to have a Chief Compliance Officer. I am the Chief Compliance Officer by default, and I also take out the garbage.

By: Neal

Neal — Fri, 21 Aug 2009 18:57:08 +0000

Dylan,

I should hire you to do my compliance!

But one thing, and I don’t see this as a linguistics issue, if I am an insurance agent and have no other certs, registrations or securities licenses, they certainly can and do provide advice but technically, they get paid zero for that…right? The compensation comes from the product sale. They don’t charge, per se, for the advice. That’s prohibited as far as I understand it.

ps Are you a compliance officer? You know a great deal about this stuff.

By: Brent Mashburn

Brent Mashburn — Fri, 21 Aug 2009 18:37:02 +0000

Thanks for the quick response and giving me a feel for what would be required.

By: Dylan

Dylan — Fri, 21 Aug 2009 18:17:55 +0000

Brent, the time involved will vary depending on what you do and how you operate. But you should be thinking in terms of hours, not minutes, probably dozens of hours on an annual basis. Many RIA’s outsource a good part of the work, but I’ve yet to hear of a way to outsource all of it. Even when you outsource, the buck stops with you. You also need to develop new habits and almost adopt a compliance mindset.

By: Brent Mashburn

Brent Mashburn — Fri, 21 Aug 2009 18:04:27 +0000

This is great information guys – thanks much. I will certainly contact my DoC and see about de minimus.

I’m still wondering though, assuming I do decide to take the Series 65 and become an RIA, is the annual workload to stay “current” complicated?

I’m just remembering how when creating my LLC the state told me I’d have to file an “annual report”, which I was dreading the first time around b/c I assumed it was going to be a hassle. It turned out to be nothing more than going online, clicking that my address hasn’t changed, and paying a renewal bill by credit card. It takes about 3 minutes!

So I think the thing is, I am 90% sure I want to do the RIA thing. I’d just like to know first what sort of obligations I’ll be getting myself into with the SEC re: record keeping, paperwork, etc.

Thanks again for all the help.