If you are planning on becoming an investment advisor (RA), it is important to understand that there are two different types of advisors, investment associates or managers, and financial planners Luke Montaine. The first step in becoming a Registered Investment Advisor or RIA is to successfully pass the Series 65 exam, which is administered by the Financial Industry Regulatory Authority. This exam is administered by FINRA, a self-regulating, private non-profit organization that develops, implements, and administers the rules related to registered investment advisers and their clients.
It is important for prospective investors to understand that when they contact an advisor, it is not always the investment advisor themselves that will be handling their money. Most often, the client will have a direct relationship with the investment advisor, meaning that the advisor will act as the fiduciary or legal representative for their IRA account.
Luke Montaine Investment Advisor in Two Ways
Once you have passed the Series 65 exam you can work towards becoming a registered investment advisor in two ways. First, many state departments of financial institutions (DFIs) will license you to become an advisor once you have met the series requirements, and once you have reached a certain number of client transactions, you may also be required to file an annual, or quarterly, filing with the SEC. Additionally, you may be required to register with the FINRA. While being registered with the FINRA does not ensure that you will receive investment advisor licenses, it does help to fulfill another state department of financial institution requirements, including that you must register with the SEC.
Secondly, investment advisors can also choose to be registered representatives. Many brokerage firms require their registered representatives to be registered with the firm, as well. Registered representatives work under the supervision of a principal advisor. Because of the potential conflict between a principal and a registered representative, these firms generally prefer to work with registered representatives who have significant experience in financial services and money management. Registered representatives are also often required to undergo background checks and financial disclosure tests.