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for Series 65 exam description and study materials
Definition:
A Registered Investment Adviser ("RIA") is an entity who, for compensation
(in any form), engages in the business of advising others, either directly or
indirectly, of the value of securities or of the advisability of investing in
securities. They receive a management fees and do not receive commissions ("RIAs
receive fees, stockbrokers receive commissions"). Incentive fees can be charged
if certain conditions are met.
To become an Registered Investment Adviser you must register with the
Securities and Exchange Commission (SEC), if you manage $25 million or more. If
you manage less than $25 million you are still under the regulatory control of
the Securities and Exchange Commission but you must register with the State
Securities Commission (or other regulatory agency) in your state of domicile and
with each state where you will solicit business (subject to "diminimus"
exemptions).
Usually, Investment Adviser Representatives ("IARs") of any Investment
Adviser must register in each state they solicit or do business in.
Registration as a Registered Investment Advisor is oftentimes a prerequisite
to setting up a Hedge Fund. RIA's also often
register as a Commodity Trading Advisor.
Exam Requirements:
There is no exam requirement by the Securities and Exchange Commission at the
federal level for the RIA entity. "IARs" (Investment Advisor Representatives),
however, may have to pass an exam; each state has its own specific
requirements.
Although State requirements are becoming more uniform, you must contact the
respective state agency that supervises investment advisers; ask them for the
proper registration forms and procedures, and which, if any, exam is required.
The state agency will provide the test application form (generally a "U-4" or
a "U-10" form) along with a registration packet for your completion.
Generally, states require NASAA's Series 65 Uniform Investment Adviser exam.
Some states require the principal of the RIA to pass the exam with a score
greater than 70%.
An alternative to the Series 65 is the combination of the
Series 7 and
Series
66 exams. The Series 66 is only good in conjunction with the
Series 7; most
states will not sponsor a candidate for the Series 7. The 7/66 combination is
generally used by an employee of a brokerage firm who is also registering as an
investment adviser. Essentially, the Series
66 equals the combination of the Series 65 and
Series 63 exams.
A sponsor is not required to take either the 65 or
66 exams -- but just
passing the exam is only one step in the procedure. You must complete the
registration process before you can solicit accounts! Note that the
Series
66 is
not valid until you pass the Series 7 exam.
Exams are administered Monday through Friday on computers by the Prometric
and Pearson VUE testing centers located in cities throughout the U.S. and in
certain overseas locations.
The exam requirement may be waived if the applicant holds certain
professional designations, i.e., Certified Financial Planner (CFP), Accredited
Personal Financial Specialist (APFS), Chartered Financial Consultant (ChFC),
Chartered Financial Analyst (CFA), or Chartered Investment Counselor (CIC).
If you are going to register in more than one state you must meet the minimum
requirements of each state.
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