Remedies and Administrative Provisions - Administrative Requirements

The initial registration fee varies from state to state, and there is no proration if an adviser registers at mid-year.

  • Registration is typically effective 30 days after the completed application is received.
  • Registrations must be renewed by December 31, and a renewal fee is required.
  • Most states require annual renewal, although some do call for bi-annual renewal.

Record Keeping Requirements
IAs must maintain client records and keep them current. Additional record keeping requirements may also be set by the administrator of the IA's home state. Typically, the following are required:

  • Books and financial records
  • Adviser contracts
  • Client reports
  • Inspections
  • Advertising and sales literature

These records must be maintained in an easily accessible place for a period of five years from the end of the fiscal year during which the last entry was made. For the first two years, the records must be maintained in the adviser's principal office.

Exam Tips and Tricks
You are likely to be questioned about the particulars of record keeping requirements. Be sure to know how long and where records must be stored by an IA. Here is a possible question:

  1. How long are investment advisers required to maintain books and records under the Investments Advisers Act of 1940?

  1. Five years from the date the record was created
  2. Five years from the date of the last entry
  3. Two years from the date of the last entry
  4. Five years from the end of the fiscal year during which the last entry was recorded

The correct answer is "d". The Investment Advisers Act of 1940 requires records be maintained for five years from the end of the fiscal year in which the last entry was made. During the first two years, the records must be maintained in an office of the adviser. For the final three years, the records may be stored off site, but they must be readily accessible.

Refer the Investment Adviser Guide on the NASAA website for further details about record keeping requirements for IAs.

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