The Investment Adviser Registration Process
To register at the state level as an investment adviser, firms must file the appropriate paperwork with the state through the national Investment Adviser Registration Depository system, or IARD, for short. To register, an investment adviser must use this system to submit a number of forms, including a Form ADV, which requires summary information about the firm, and a Form U4, which requires information about the people who work for the firm. Investment adviser applicants must give permission for an appropriate background check to be performed and sign a “consent to service of process,” which allows a state Administrator to receive legal papers (summons, notice of lawsuits, etc.) on behalf of the adviser. Once the consent to service of process has been filed, it does not need to be renewed.
Part 1 of Form ADV (which is short for “adviser”) is general information about the investment adviser, such as:
- • Information about the ownership and nature of their practice, including the names of the principals involved
- • Location of the main office
- • Types of services offered
- • Whether the adviser has custody of customer assets
- • Location of books and records
- • Any relevant regulatory/disciplinary history
Part 2 of Form ADV (the brochure) includes information relevant to the customer, such as:
- • Fees or fee structure for the services provided
- • Types of advisory services offered
- • Methods of analyzing investments (e.g., technical versus fundamental)
- • Any disciplinary actions information
- • Any conflicts of interest
- • Educational and business background of management and key advisory personnel
For state registration, firms submit Form ADV, Parts 1 and 2, to the Administrator. Federal covered advisers, however, submit only Parts 1 and 2A to the SEC, and save Part 2B in their records. Part 2A is the “brochure”;