Generally, what determines who will regulate an investment adviser is the amount of assets under management. If assets under management are $100 million or more, that adviser with file an RIA application with the United States Securities and Exchange Commission (the SEC). Those with less than $100 million under management will register with their respective state regulator. There are some exceptions. For example, one way to file for registration with the SEC if the adviser has under $100 million in assets is if it has an affiliate that is already registered with the SEC. Another exception exists for those with close to $100 million in assets who expect to reach that threshold within 120 days of approval.

The initial step in registering an investment adviser is a consultation with a FirstMark expert about your goals and objectives. FirstMark will guide you through every step of the process. Here are some key elements of the application process:

• • Prospective entity name search and reservation

• • Corporate entity formation (e.g. LLC, corporation, etc.)*

• • Determining the appropriate regulator (e.g. State, SEC)

• • Preparatory interviews with key adviser parties

• • Obtain FINRA entitlements

• • Draft and submit regulatory filings (Form ADV, Parts 1, 2A, 2B, and Form U4)

• • Monitor status of application and respond to regulatory inquiries

• • Draft required compliance documents and procedures
    • • Regulation SP – Privacy Policy
    • • Business Continuity Plan
    • • Policies and Procedures
    • • Code of Ethics

• • Application Decision

*FirstMark does not file corporations or draft corporate legal documents as part of its services.

Almost all states require that the individuals working through a registered investment adviser register as Investment Advisor Representatives. To become an IAR, individuals must file for the registration and take and pass the FINRA Series 65 examination, also called the NASAA Investment Advisors Law Examination. While it is administered by FINRA, it is a North American Securities Administrators Association (NASAA) exam. Candidates are given three (3) hours to complete 130 questions on the exam. You can find more information about the content of the exam on the NASAA website.

From the time FirstMark is engaged by the client, the overall process can take between 1 – 3 months. These time frames vary widely depending upon the regulator reviewing the application. Also, a key factor in the duration of an application is whether the applicant or its proposed personnel have a disciplinary history or significant disclosure item. These items can complicate the process and thus cause it to take considerably longer.