Figuring Out the
RIA Roadmap

There are big advantages—and responsibilities—to becoming a registered investment advisor. Understanding what’s involved is the first step to building a successful practice.

Among the biggest draws of becoming a registered investment advisor (RIA) is the freedom to control the kind of advisory services you can provide your clients. After all, navigating today’s markets is more complex than ever. But as an RIA, you have the ability to offer individuals a selection of products and services that make sense of this confusing landscape, and can help them reach their financial goals.

Among the biggest draws of becoming a registered investment advisor (RIA) is the freedom to control the kind of advisory services you can provide your clients.

But before recruiting clients or launching a marketing campaign for your investment services, there are a number of steps that need to be followed to make sure you’re complying with the appropriate state and federal laws. Interactive Brokers (IBKR), a Greenwich, Connecticut-based securities firm with over 40 years in the business, launched Greenwich Compliance to make the process a bit easier. The firm provides hands-on registration and start-up compliance support for RIAs, as well as on-going consulting.

The first step to becoming an RIA is to set up your business. Some individuals form a corporation, an S Corp, or a partnership, but the most common legal structure for an RIA is a Limited Liability Company (LLC). Once that’s set up, you’ll receive an employer identification number (EIN). As the name implies, this is the number used by the IRS to identify businesses with respect to their tax obligations.

Once your business is set up, there are a number of forms to attend to. The first is registering with the Investment Advisor Registration Depository (IARD). The IARD is an electronic filing system that helps with RIA registration, regulatory review and the public disclosure information of investment advisor firms. All RIAs must now use the IARD to register with the SEC or the states in which they do business, and they can begin the process by creating the account here.

Growing your business and working with clients will be the focus going forward, and that’s where IBKR’s Greenwich Compliance can help.

After your IARD account is set up, you will be able to access and complete the required Form ADV. Keep in mind, this form is 73 pages long and comes in two parts. The first section asks for personal information about the advisor, business colleagues, and if any of these individuals have ever violated securities laws. The second section requires information about the advisor’s business practices, conflicts of interests and the types of clients she or he is looking to retain. The same information needs to be provided for anyone the advisor hires.

While these forms are being processed, it’s a good idea to address the exams you must pass in order to do business as an agent of an RIA. There are two different exams, but you’ll only need to pass one. The Uniform Investment Advisor Law Examination is better known as Series 65. The Uniform Combined State Law Examination is known as Series 66. You can register for either one through the Financial Industry Regulatory Authority (FINRA). After you complete and submit the exam, remember to check the status of your Form ADV. The SEC generally has 45 days to declare a registration effective, and once it does you’ll receive a letter in the mail.

While it may seem as if becoming an RIA is an endless stream of forms, the paperwork is just a small part of getting started. Growing your business and working with clients will be the focus going forward, and that’s where IBKR’s Greenwich Compliance can help. It offers RIAs trading, clearing and reporting services—everything needed to build a successful practice. Its platform allows you to customize statements, customer registration forms and informational materials, all with powerful trading technology, low client commissions and access to global markets. In other words, it helps take care of you so you can take care of your clients.

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