The NASAA Memorandum of Understanding mentioned above addresses the subject of investment adviser representative (IAR) by the following:
If an investment adviser is registered with the SEC, the states may not require registration, licensing, or qualification of the investment adviser or its supervised persons except that states may license, register, or otherwise qualify investment adviser representatives who have a place of business located within that state. Additionally, the states retain the authority to investigate and bring enforcement actions in the case of fraud or deceit, and as otherwise permitted by the NSMIA, by SEC registered investment advisers and their associated persons.
If a person meets the above criteria for IAR, he/she MUST register with the state!
Basically, the investment adviser (the firm) may be registered with the state (under the
If you are having trouble with the term investment adviser representative, think of an IAR in a similar capacity as an agent is to a broker-dealer. An IAR represents an investment adviser.
The term does not include an individual who:
- Performs only clerical or ministerial acts
- Is an agent whose performance of investment advice is solely incidental to the individual acting as an agent, and who does not receive special compensation for investment advisery services
- Is a federal covered investment adviser representative (however, if a federal-covered investment adviser has a place of business in a state where a representative conducts business, the representative may be required to register with the state Administrator.) Do NOT confuse a federal covered investment adviser with an investment adviser required to file on a state level.
If John calls Excellent Money Managers, Inc. to speak with someone about his portfolio and ends up talking to Kathy Kash, is he talking to the investment adviser representative, or the investment adviser?
John is talking to the investment adviser representative (Kathy Kash), an employee of the investment adviser, Excellent Money Managers, Inc.
Big Bubba Bob is an investment adviser representative of Kamikaze Portfolio Managers, a federal covered investment adviser (meaning it is registered with the SEC); he has clients in
California, New York, Coloradoand . The company's offices are located in Alaska . In what states does he have to register with the Administrator(s) to work as an investment adviser representative? Georgia
if that's where he does business. However, because Kamikaze Portfolio Managers is a federal covered investment adviser (registered with the SEC) he does not have to register in the state where his firm has no physical address. Georgia
Investment Advisers: Ongoing Requirements
Financial AdvisorLearn the importance of having a financial adviser whom you can trust and why questioning the funds he selects is part of that process.
Financial AdvisorUnderstand what creates dissatisfaction between financial advisers and their firms, and learn the top reasons advisers ultimately make the decision to leave.
Financial AdvisorDiscover what a career as a financial adviser entails, and learn what pros and cons an individual faces when embarking on a career in this field.
Financial AdvisorLearn how the worst financial advisers tend to share common traits, including greed, arrogance, ignorance and being difficult to reach when times are tough.
Personal FinanceRead an in-depth review of the differences between a career as a financial Adviser versus a career as a Financial Analyst, including how to decide which is best.
Financial AdvisorPay attention to the habits of your financial adviser to avoid him ripping you off by commingling, churning, scamming or embezzling your money.
Financial AdvisorFind out which digital platforms financial advisers should look to as the trend toward adviser-based digital advice continues into 2016.
Financial AdvisorOnce you've hired a new adviser, an equally important process begins: training them.
Financial AdvisorShould you use an online financial planning service, or do professional, fee-based financial planners justify their higher costs?
RetirementSavvy financial advisers will either need to gain Social Security advice expertise or find a source or partner to provide this vital service to clients.