How to Become a Registered Investment Adviser

The firm and the person

The Investment Advisers Act of 1940 defines an investment adviser as any person who, for compensation, engages in the business of advising others about the value of securities or the advisability of investing in, buying or selling them, or who, for compensation and as part of a regular business, issues analyses or reports about securities. Person in that sentence includes a company, and in practice the adviser that registers is usually a firm. RIA is the industry's shorthand for that registered firm. This course uses the word that way throughout, and it spells adviser the way the statute does.

The human being is an investment adviser representative, or IAR. The Uniform Securities Act of 1956, as amended by NASAA, defines the term by function. It covers a partner, officer, director or other individual employed by or associated with an adviser who makes recommendations or gives advice about securities, manages client accounts or portfolios, decides what advice should be given, solicits or sells advisory services, or supervises anyone who does those things. Notice how far that reaches. A person who only sells the firm's advisory services, and never picks a security, is inside the definition.

The Act makes both registrations mandatory and links them. Section 201(c) makes it unlawful to transact business in a state as an adviser or as a representative without being registered, subject to narrow exceptions. Section 201(d) makes it unlawful for an adviser that must register to employ an unregistered representative, and it provides that a representative's registration is not effective during any period when the person is not employed by a registered adviser. So a representative's registration hangs from a firm. Leave the firm and the registration does not travel with you.

The federal side uses the same label more narrowly. For an SEC-registered firm, SEC Rule 203A-3 defines an investment adviser representative as a supervised person with more than five natural-person clients, more than ten percent of whose clients are natural persons, with qualified clients excepted from the count. Someone who does not regularly communicate with clients, or who gives only impersonal advice, falls outside it. That definition matters because of what the states kept: section 203A of the Advisers Act lets a state license, register or otherwise qualify an investment adviser representative who has a place of business in that state, even when the firm is registered with the SEC. So a firm can be federal and its representatives still state-registered, and that is the ordinary arrangement the exam exists to serve.

Firm registration: the SEC or the state

A firm registers on one side of the line, and the deciding fact is usually assets under management, meaning the securities portfolios for which the adviser provides continuous and regular supervisory or management services.

Below $25 million, the answer is the state. Section 203A(a)(1) bars an adviser regulated in the state of its principal office from registering with the SEC unless it has at least $25 million under management or advises a registered investment company.

From $25 million up to $100 million, a mid-sized adviser that is required to register in its home state, and would be subject to examination there, also may not register with the SEC. The exceptions are an adviser to a registered investment company or an electing business development company, and an adviser that would otherwise have to register with 15 or more states.

At the top, SEC Rule 203A-1 builds a buffer so a firm does not flip back and forth with the markets. An adviser described in the mid-sized provision may register with the SEC, but need not, at $100 million or more and under $110 million. The Form ADV instructions say it must apply at $110 million or more. Once registered, it need not withdraw unless it falls below $90 million.

Rule 203A-2 adds exemptions from the prohibition that do not depend on those figures: certain pension consultants, advisers under common control with an SEC-registered adviser at the same principal office, advisers expecting to be eligible within 120 days, multi-state advisers, and internet advisers. Each has conditions, and the law module takes them up.

Registration on one side shuts off the other, within limits. A state may not require an SEC-registered adviser to register as an adviser, but it keeps its power to investigate and bring enforcement actions for fraud or deceit. A state-registered adviser, for its part, does not need to register in every state where it has a client. The federal national de minimis standard in section 222 says a state cannot require registration of an adviser with no place of business there and fewer than 6 client residents in the preceding 12 months. The Uniform Securities Act states the same idea as no more than five non-institutional clients.

The qualification: three routes

The exam belongs to the individual, not the firm, and it is the state that requires it. The Act lets the Administrator provide by rule for an examination of applicants and waive it for a person or class of persons. NASAA's guide says passing the Series 65, or holding certain qualifying designations, is normally a prerequisite for licensure as an investment adviser representative in a state.

The first route is the Series 65, the Uniform Investment Adviser Law Examination. It stands alone. You do not need a sponsoring firm, and you do not need the Securities Industry Essentials exam.

The second route is the Series 66, the Uniform Combined State Law Examination, taken together with a valid SIE and Series 7. NASAA's FAQ says that combination qualifies you as if you had passed both the Series 63 and the Series 65, and that the order does not matter so long as you hold both at the time you seek state registration. The Series 66 alone does nothing, because the SIE and Series 7 are co-requisites. It suits someone already in a broker-dealer. For someone who wants to be an adviser and not an agent, the Series 65 needs no other exam.

The third route is a waiver. NASAA's FAQ says most states will let an individual substitute an approved designation for the Series 65. NASAA's current model rule lists five: Certified Financial Planner (CFP), Chartered Financial Consultant (ChFC), Chartered Financial Analyst (CFA), Personal Financial Specialist (PFS) and Certified Investment Management Analyst (CIMA). Its May 2024 amendments replaced the Chartered Investment Counselor with the CIMA and deleted the Master of Science in Financial Services degree, so older lists differ, and the February 2025 FAQ still names that degree. A model rule binds no one until a state adopts it, and the FAQ tells candidates to confirm whether their state accepts the updated list, so treat your state's own rule as controlling. The waiver is claimed by checking the box in Section 8 of Form U4, and the CRD system checks the certifying body's database. Two limits are worth learning now. A CPA licence alone does not qualify, since NASAA found the PFS met its criteria and the CPA certification by itself did not. And a designation waives the Series 65 only, never the Series 66.

One more possibility: the FAQ tells a person who already holds the Series 63, SIE and Series 7 to ask first whether their state lets registered brokerage representatives act as investment adviser representatives without further qualification. Some states evidently do, and an employer may still demand more than state law does.

What passing does not give you

NASAA is blunt about this. Passing the Series 65 does not in and of itself confer the right to transact securities business in any state. Its FAQ calls an exam a prerequisite to a license, not a license in and of itself. Here is what you do not have the morning after you pass.

You do not have a registration. A state may still require an application, usually a Form U4 filed by a firm, plus a background check, bonding and fees. In most cases you apply through the adviser firm you are affiliated with, so a candidate with no firm has a pass and nowhere to hang it.

You do not have a firm. Passing does nothing for the firm's Form ADV, or for anything the firm must have in place to be registered.

You do not have a permanent result. Most states follow a two-year rule: you have two years after passing to become registered, or the exam expires. Once you are registered it stays valid while you stay registered, and on termination the two-year clock starts again.

You do not have accredited investor status. The FAQ addresses this directly. The SEC's order covers a person holding the licence in good standing, and the SEC said that a person relying on the Series 65 would also need to be licensed as an investment adviser representative in her state.

You are not finished learning either. There are no continuing education requirements attached to the exam itself. But in a jurisdiction that has adopted NASAA's model rule, a registered IAR owes 12 credits a year: 6 of Products and Practice and 6 of Ethics and Professional Responsibility. The split is mandatory and credits do not carry forward. The requirement follows where the IAR is registered, not where the firm is, and it begins on January 1 of the year after first registration in such a state.

One state worked through, and how to use this course

Texas shows how the pieces fit, and it is only an example. The Texas State Securities Board has applicants file through the Investment Adviser Registration Depository. The firm files Form ADV Parts 1 and 2 and each representative files Form U4. The board's page says that filing the U4 automatically schedules the IAR for the Series 65. Other documents go directly to the board: organizational documents, a balance sheet with a certification form, the standard advisory contract and a fee schedule. The board's page lists fees of $75 for the firm and $35 for each representative, separate from anything FINRA charges for using the system. Notice how much of that has nothing to do with the exam.

Your state will differ. NASAA's model acts and rules have no legal force until a jurisdiction adopts them, and each jurisdiction decides whether and how to do so. This course teaches the uniform material the exam tests, and that is not the same as the law of your state. Whenever a requirement matters to you personally, your state's Administrator controls, which means the securities official or agency that runs that state's securities law. NASAA's site lists every regulator's contact details.

The course follows the exam's own structure: the path into the profession, then economics and business information, investment vehicles, client recommendations and strategies, the law and ethics, and finally a practice module. The next lesson covers the exam itself.

This course is not affiliated with, endorsed by or produced in cooperation with NASAA, FINRA or the SEC, and it contains no exam questions. Exam questions are NASAA's copyright material, NASAA expressly prohibits their unauthorized use, and it reserves the right to refer anyone who compromises the exam to state regulators and law enforcement. Nothing here is legal advice about your own registration.