1.1.2.2. The Investment Adviser Registration Process
To register at the state level as an investment adviser, persons must file the appropriate paperwork with the state through the federally run Investment Adviser Registration Depository system, or IARD. To register, an investment adviser must use this system to submit a Form ADV. Some states may require the filing of additional forms such as advisory contracts and financial statements as well.
The applicant must also give permission for the administrator to perform an appropriate background check and sign a consent to service of process, which allows the administrator to receive legal papers (summons, notice of lawsuits, etc.) on behalf of the adviser. Once the consent to service of process is filed, it does not need to be renewed.
Part 1 of Form ADV (which is short for Adviser) includes general information about the investment adviser such as:
• Information about the ownership and nature of their practice including the names of the principals involved
• The location of the main office
• The types of services offered
• Whether the adviser keeps custody of customer assets
• The location of books and records
• Any relevant regulatory/disciplinary history
Part 2A of Form ADV includes information relevant to the firm’s clients, such as:
• Fees or fee structure for the services provided
• Types of clients and investments
• Methods of analyzing investments (e.g., technical versus fundamental)
• The educational and business background of the advisers.
Part 2B of Form ADV provides specific information about the educational background, employment qualifications, disciplinary history, other business activities, and additional sources of compensation for any registered person who will be working with a client.
Part 3 of Form ADV is Form CRS, which is a summary of the relationship between a client and the firm that investment advisers must de