Compliance Solutions for Investment Advisers

FAQs — Advisory Representatives

 

What is an investment adviser representative?

The Uniform Securities Act defines investment adviser representative as follows:

“Investment adviser representative” means an individual employed by or associated with an investment adviser or federal covered investment adviser and who makes any recommendations or otherwise gives investment advice regarding securities, manages accounts or portfolios of clients, determines which recommendation or advice regarding securities should be given, provides investment advice or holds herself or himself out as providing investment advice, receives compensation to solicit, offer, or negotiate for the sale of or for selling investment advice, or supervises employees who perform any of the foregoing.

Since the definition of an investment adviser representative can vary significantly from state to state, the rules of each particular state securities regulator should be consulted. If an individual meets the state’s definition of an investment adviser representative and maintains a place of business within a state or has a certain number of clients within the state, then most state securities regulators will require the individual to register as an investment adviser representative.

What are the requirements for registering as an investment adviser representative?

Most states require that in order for an individual to become registered as an investment adviser representative, such individual must have successfully completed the Series 65 examination (e.g., the Uniform Investment Adviser Law Examination).

Are there any exceptions to these requirements?

Yes. If an individual currently holds and maintains in good standing the Certified Financial Planner (CFP), Chartered Financial Analyst (CFA), Personal Financial Specialist (PFS), Chartered Investment Counselor (CIC) and/or Chartered Financial Consultant (ChFC) designation, most states will waive the successful completion of the Series 65.

How do I apply for a waiver of the Series 65 based on my professional certification?

The Form U-4 has a box that should be checked indicating the certification that you hold.

If I have the Series 7 and Series 66, do I need to take the Series 65 exam?

If you have successfully completed and currently maintain both the Series 66 and the Series 7 licenses with a registered securities broker-dealer, most state securities regulators will not require such an individual to take the Series 65 exam. However, if you do not maintain a broker-dealer affiliation as a registered representative and securities agent in the future, some state securities regulators will require you to successfully complete the Series 65 exam before continuing any further activities as an investment advisor representative.

Do states impose any additional requirements?

Yes. Some states require individuals to have a requisite amount of experience in the financial industry before they will permit registration as an investment adviser representative.

Do I need to get fingerprinted?

The requirement to get fingerprinted varies from state to state. You must check the requirements for each specific state in which you are applying for registration as an investment adviser representative. In addition, you must be mindful of the particular fingerprint process required by a state as some states allow an applicant to submit fingerprint cards directly while others require the use of an electronic fingerprint card.

Who administers the Series 65 exam?
The Series 65 exam is administered for the North American Securities Administrators Association (NASAA) by the Financial Industry Regulatory Authority (FINRA).

How much does it cost to take the Series 65 exam?
Currently, the fee is one hundred thirty-five dollars ($135.00).

How do I register to take the Series 65 exam?
There are two ways to register to take the Series 65. One is for your advisory firm to indicate on your Form U-4 that you want to register to take the exam. The other is for you to independently file a Form U-10 on your own (unlike the Series 7, an individual does not need to be sponsored by a firm in order to take the Series 65 exam). Once registered, FINRA will open a 120-day window within which you may then schedule the exam.

What subjects are covered by the Series 65 exam?
Since the subject matter changes from year to year, the best resource for determining current subject matter is the web site of the North American Securities Administrators Association (www.nasaa.org). Currently, the Series 65 exam consists of 130 questions plus 10 pretest questions covering the materials outlined in the NASAA study outline. Applicants are allowed 180 minutes to complete the examination. At least 94 (72%) of the questions must be answered correctly for an individual to pass the Series 65 exam.

Are there any prerequisites for taking the Series 65 exam?
No.

How long must I wait after failing he Series 65 before I can take it again?
The following waiting periods apply for individuals needing to retake the Series 65 exam following a failed attempt: (i) a minimum of 30 days after failing the first exam before the second taking of the exam can be scheduled; (ii) a minimum of 30 days after failing the exam for the second time before the third taking of the exam can be scheduled; and (ii) a minimum of 180 days after failing the exam for a third time before the fourth taking of the exam (and each subsequent taking) can be scheduled.

Are waivers granted to the 180-day waiting period to re-take the exam?
Such waivers are extremely rare.

Is there a limit on the number of times I can re-take an exam?
There is no limit for NASAA exams as long as the applicable waiting period requirements are met.

Do I need to pass the Series 65 if I am just soliciting clients for an investment adviser or getting referral fees?
Many states require solicitors, as well as those receiving referral fees, to qualify and register as investment adviser representatives. You should check with each individual state for specific requirements.

Once I pass the Series 65 exam, can I immediately start acting as an investment adviser representative?
No. Passing an exam is merely a pre-requisite for being licensed by a state. Usually there are other requirements, such as an application (e.g., the Form U4), background check, fingerprinting, bonding, and fee payment, that a state may impose before granting a license.

 

Important Information

The information contained in this Frequently Asked Questions is only a summary and is not intended to be a comprehensive analysis of the rules and regulations applicable to registered investment advisers. It is not intended to constitute legal or compliance consulting advice or apply to any one investment adviser’s particular situation. For more information, please see our Terms of Use.

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