How to become a registered investment advisor

What does a registered investment advisor do?

An RIA provides financial counsel and helps investors grow their financial portfolios. They are registered with the Securities and Exchange Commission (SEC) and have met rigorous licensing requirements that ensure that they are qualified to help others in critical financial matters.

Key skills

• Interpersonal
• Customer relationship management
• Math
• Financial analysis

Steps to become a registered investment advisor

If you want to offer financial advice to investors, you need to become an Investment Advisor Representative (IAR) who works under a Registered Investment Advisor (RIA) firm. An RIA firm, whether an individual person or company, is registered with the SEC or state regulator. An IAR is simply someone who works for an RIA firm.

Many aspiring registered investment advisors take the following steps:

Step 1: Earn a bachelor's degree

Many entry-level positions require a bachelor's degree. To help prepare you for your work responsibilities, consider a degree in finance, business, economics, or a similar field. Some firms prefer to hire candidates with a master's degree, particularly for positions that aren't entry-level.

Step 2: Take the Series 65 exam

The first step is to pass the Series 65 exam (also known as the Uniform Investment Advisor Law Exam).

This test covers federal securities laws and investment topics and is administered by the Financial Industry Regulatory Authority (FINRA). The exam consists of 140 questions, 10 of which are not scored. To pass, one must correctly answer 94 of the 130 other questions. Passing this test qualifies you for the title of Investment Advisor Representative (IAR).

Step 3: Register with the SEC or state securities agency

The next step is to register your RIA firm. Whether you register with the SEC or a state securities agency mainly depends on the size of the investment pool an RIA works with. If and when an RIA has an investment pool of over $100 million, it must register with the SEC. If the investment pool falls below this threshold, you can register with your state securities commission instead.

Step 4: File your Form ADV

Form ADV is your registration document and is a necessary disclosure for your clients. It consists of two parts — details about your RIA firm and your disclosure.

Once this document is filed, the SEC or state securities commission will review it for approval. Once this document is approved, you are legally authorized to begin working with clients.