Investment Advisors who serve more than 5 California residents and manage less than $100 million in AUM need to register with the state. If the advisor manages more than $100 million in AUM, they might also register with the SEC. Finally, if investment advisors market their services in California, they must also register with the state. State requirements will vary slightly among states. In California, the state requires the following to be submitted: These licenses and designations enable financial professionals to become licensed advisors or planners. So, regardless of what state you're trying to register in, you must successfully obtain one of the following: Advisors must apply to FINRA for an account to their WebCRD/IARD online system to file a registered investment adviser application with California. In a previous article, we covered how to register with the SEC, but in this article, we’ll explain what you need to register at a state level. In this particular instance, we’ll look at California.
Who is required to register in the state of California?
If you need more guidance, we’re here to help you navigate the path to starting your RIA:
Financial statement requirements for RIAs
Pass Series 65, Series 66 & 7 combined, or have the appropriate designation
Forms & Policies required by California
While RIAs are not regulated or supervised by FINRA, California uses FINRA’s WebCRD/IARD system to process applications.
Part 1 of the Form ADV covers details about the advisor's business and ownership structure and any affiliations related to business practices, clients, and additional information about employees.
In other words, part one discloses information about how the RIA conducts business. Also, since Part 1 is done online, it’s used to upload ADV Part 2A and Part 2B.
Part 2A & 2B is your RIA’s brochure. Here you will disclose a description of your services, fees you charge, disciplinary disclosures, and other details of your RIA. It includes employment, education, conflicts of interest, and disciplinary information.
These brochures are given to all clients: prospective and current. California requires that this portion of the ADV be written in plain English so your clients can easily understand it.
This contract must meet the regulatory authority standards in California. Essentially, this outlines the relationship between you and your clients.
This manual includes all your RIA’s internal policies on all parts of your business. From training new advisors to handling clients' complaints–every policy and procedure your RIA adheres to must be included and explained in this manual.
This manual must also include your RIA’s Information Technology Policy, Business Continuity Plan, Anti-insider Trading Policy, and Anti-money Laundering Policy.
Your RIA’s Privacy Policy is given to your clients at the beginning of your agreement and must be shared annually. It must explain how the firm stores and handles client information.
Your policy should be tailored to your RIA’s specifications and must meet the State of California’s compliance requirements.
The state requires this to ensure you meet the standards of the State of California.
If you like to learn more about starting your RIA, check out this helpful RIA launch kit our team has put together.
With Altruist, you can seamlessly transition to a custodial platform built for RIAs. Simplify your tech stack, reduce overhead, delight your clients, and grow your business. True independence awaits. Book a call with one of our transitional specialists now.
*Altruist and its affiliates do not provide legal advice, so it’s important to check with a qualified professional for each state’s registration requirements.