Registration and Post-Registration

This section covers IAR registration requirements, qualification exams, de minimis exemptions, Form U4 amendments, books and records, continuing education, and supervision of IARs.

Where Do IARs Register?

IARs always register with states, never with the SEC. Even if the employing IA is federally registered (SEC-registered), the IAR registers at the state level.

• How: File Form U4 (Uniform Application for Securities Industry Registration or Transfer) through the IARD (Investment Adviser Registration Depository) system
• The investment adviser firm (not the individual IAR) submits the Form U4 on behalf of the IAR

Which State Has Registration Authority?

An IAR registers in every state where the IAR personally has a place of business, whether the employing adviser is state-registered or federal covered.

Federal law (the Investment Advisers Act of 1940) preempts states from requiring a federal covered adviser itself to register. But it carves out an exception for that adviser's IARs: a state can still license, register, or qualify them, based on the IAR's own place of business.

Exam Tip: Gotchas

• SEC registration of the adviser does not carry over to the IAR. States cannot require the federal covered adviser itself to register, but can require its IARs to register based on their own places of business.
• Antifraud jurisdiction over the adviser itself is a separate, broader carve-out. The IAR registration carve-out is tied specifically to the IAR's place of business.
• Client count never decides a federal covered adviser's IAR question. Federal law lets a state reach that IAR only through place of business, so a stem naming a federal covered adviser answers from place of business alone. The client-count de minimis exemption below belongs to a different population; see that section.

When May the Administrator Deny Registration?

Under the Uniform Securities Act, denial requires both a statutory ground and a finding that the order is in the public interest. A disqualifying event by itself does not automatically deny an IAR application. For example, if two applicants have the same disqualification but the Administrator finds denial in the public interest only for one, that finding supports denial only for that applicant on this ground.

What Exam Do IARs Need to Pass?

Under the NASAA Examination Requirements for Investment Advisers and Investment Adviser Representatives Model Rule, an individual must pass a qualifying examination to register as an IAR:

• Exam reciprocity: an individual who has been registered as an IAR in any state within the two years before filing the application is not required to retake the qualifying examinations

Which Designations Waive the Exam?

Five designations waive the qualifying exam requirement, whichever exam path would otherwise apply:

• CFA: Chartered Financial Analyst
• CFP: Certified Financial Planner
• ChFC: Chartered Financial Consultant
• PFS: Personal Financial Specialist
• CIMA: Certified Investment Management Analyst

Key rules for designation waivers:

• The designation must be current and in good standing at the time the application is filed to qualify for the waiver
• The waiver applies only to the exam requirement, not to state registration itself
• A Form U4 must still be filed for the IAR, along with the state registration fee

Exam Tip: Gotchas

• A qualifying designation waives only the exam, not the registration. If the designation has lapsed when an application is filed, the waiver is not available, and the individual must meet another qualifying exam route.
• The list is five, not six, and CIC is not on it. NASAA replaced CIC (Chartered Investment Counselor) with CIMA in May 2024, and the CIC program was discontinued in 2025. Older prep books and some state rules that have not yet conformed still list CIC. If an answer choice offers CIC, it is not a qualifying designation under the model rule.

What Activities Require Registration?

The following activities require IAR registration:

• Making investment recommendations to clients
• Managing client accounts or portfolios
• Determining which advice should be given to specific clients
• Soliciting or selling investment advisory services
• Supervising persons who perform any of the above

Who Is Excluded from Registration?

The following individuals are NOT required to register as IARs:

• Clerical and ministerial personnel who do not perform advisory functions
• Under the federal IAR definition: supervised persons of federal covered advisers who do not regularly solicit, meet with, or communicate with clients
• Persons providing only impersonal investment advice (e.g., written publications of general circulation not tailored to individual clients)

What Is the De Minimis Exemption?

This exemption applies to IARs of state-registered advisers. An IAR of a state-registered adviser who does not have a place of business in a state may be exempt from registration in that state if the IAR has fewer than 6 clients who are residents of that state during the preceding 12-month period.

Key points:

• Institutional clients generally do not count toward the client threshold
• The exemption requires both conditions: (1) no place of business in the state AND (2) fewer than 6 resident clients
• Having even one office in the state (including a satellite or part-time office where the IAR operates) eliminates the exemption regardless of client count
• An IAR of a federal covered adviser has no client-count alternative. Place of business alone controls: with no place of business in a state, federal law gives that state no authority to require registration there, no matter how many resident clients the IAR has; with a place of business, registration is required no matter how few clients the IAR has.

Exam Tip: Gotchas

• The de minimis exemption has two requirements that must both be met. Having a place of business in a state means you must register there even if you have only 1 client.
• Do not apply this client-count test to a federal covered adviser's IAR. That population is governed by "Which State Has Registration Authority?" above, not by this section.

What Happens After Registration?

When Must Form U4 Be Amended?

IARs have a continuing obligation to amend Form U4 whenever disclosed information changes.

Reportable events that require prompt Form U4 amendment:

The NASAA model rule that governs IAR Form U4 amendments sets a single 30-day standard for every reportable event. There is no shorter deadline for any category, including a disqualifying conviction or regulatory bar. (A 10-day carve-out does exist, but only under FINRA's rules for broker-dealer agents, a different population registering with a different regulator; do not apply it to IARs.)

On the exam, that rule appears as the NASAA Registration Requirements for Investment Adviser Representatives Model Rule.

Form U4 disclosure and Form U5 termination are separate. Form U4 asks whether an individual resigned, was discharged, or was permitted to resign after allegations of investment-related misconduct, fraud, wrongful taking of property, or failure to supervise in connection with investment-related statutes, regulations, rules, or industry standards of conduct. Form U5 is the firm's filing to report the end of employment and the reason for departure, generally within 30 days. A reportable termination can appear on both forms; a Form U4 disclosure does not replace the firm's Form U5 filing.

Important disclosure rules:

• All felonies must be disclosed (no time limit)
• Certain misdemeanors must be disclosed (no time limit), and the category is broader than "securities-related": investment-related business, fraud, wrongful taking of property, bribery, perjury, forgery, counterfeiting, extortion, or a conspiracy to commit any of these (see Gotchas below)
• Disclosure is required for charges, not just convictions
• Filing misleading information or omitting material facts on Form U4 can result in denial, suspension, or revocation of registration

Exam Tip: Gotchas

• Form U4 requires disclosure of criminal charges, not just convictions. An IAR charged with a felony must disclose it, even before trial. That amendment is due within 30 days, like every other reportable event; there is no shorter deadline for IARs, not even for a disqualifying conviction or regulatory bar.
• A felony later reduced to a misdemeanor or dismissed must still be reported as originally charged.
• Criminal disclosure has no look-back period. A felony or a reportable misdemeanor must be disclosed no matter how long ago it happened.
• The reportable misdemeanor category is not limited to securities offenses. It also reaches fraud, wrongful taking of property (including plain theft), bribery, perjury, forgery, counterfeiting, and extortion.

What Records Must Be Maintained?

Investment advisers must maintain books and records related to their IARs' activities. For a state-registered adviser, the governing rule is the NASAA Recordkeeping Requirements for Investment Advisers Model Rule.

Required records include:

• Client communications (emails, letters, advertising materials)
• Trade records and account documentation
• Advisory contracts and written agreements
• Financial planning documents provided to clients
• Evidence of supervisory reviews

Records must generally be maintained for 5 years in an easily accessible place, with the first 2 years specifically kept at the adviser's principal office.

How Do IARs Maintain Their Registration?

IARs must maintain their registration by:

• Keeping Form U4 current with prompt amendments
• Completing applicable continuing education requirements
• Paying annual registration renewal fees
• Remaining associated with a registered investment adviser

What Happens When an IAR's Employment Ends?

Two things happen, and they come from two different rulebooks.

What the Uniform Securities Act itself requires: when an IAR begins or ends employment with an investment adviser, notice must go promptly to the Administrator. For an IAR of a state-registered adviser, the firm gives that notice; for an IAR of a federal covered adviser, the IAR does. The Act sets no day count. It just says promptly.

What the filing system adds: in practice that notice is given on Form U5 (Uniform Termination Notice for Securities Industry Registration), filed by the IA firm (not the IAR) through the IARD system, generally within 30 days of the termination date. Form U5 and its 30-day deadline are creatures of the CRD/IARD forms and FINRA's rules, not of the Uniform Securities Act.

• Form U5 discloses the reason for termination (for example, voluntary resignation, discharge, or permitted to resign)
• It also asks whether the individual voluntarily resigned, was discharged, or was permitted to resign after allegations of violating investment-related laws, regulations, rules, or industry standards of conduct; fraud or wrongful taking of property; or failure to supervise in connection with investment-related statutes, regulations, rules, or industry standards of conduct
• Customer complaints are reported through separate questions
• "Permitted to resign" is its own disclosure category, distinct from a clean voluntary resignation
• If the IA firm fails to file Form U5, the IAR may notify the Administrator directly
• The IAR may add a comment to the Form U5 if the IAR disagrees with the firm's characterization of the termination
• The filing remains part of the IAR's permanent registration record, even after the IAR becomes associated with a new firm

Exam Tip: Gotchas

• The IAR never files their own Form U5. Only the employing IA firm can file it. If the firm fails to, the IAR's recourse is to notify the Administrator directly, not to file a substitute Form U5.
• A Form U5 termination filing doesn't disappear when the IAR moves to a new firm. It stays part of the IAR's registration history for regulators to review.
• Know which rulebook the question is asking about. The Act says "promptly" and names no form. The 30-day Form U5 deadline comes from the filing system, not the Act. If a question asks what the Uniform Securities Act requires on termination, the answer is prompt notice, not 30 days.

Withdrawal and later proceedings: If registration withdrawal becomes effective automatically, the Administrator may still begin a revocation or suspension proceeding for a willful violation within one year after the withdrawal became effective. The clock runs from effective withdrawal, not discovery. This narrow post-withdrawal power is distinct from separate criminal or civil remedies; it does not mean every enforcement action has a one-year limit.

What Are the CE Requirements?

The NASAA Model Rule on Investment Adviser Representative Continuing Education (CE) establishes CE requirements for IARs. States must individually adopt the model rule for it to apply to IARs in that state.

Once a state adopts the rule, it covers every IAR registered in that state, whether the employing adviser is state-registered or federal covered. The trigger is where the IAR is registered, not where the firm is registered or notice filed. A state that has not adopted the rule imposes no IAR CE requirement of its own.

How Many CE Credits Are Required?

• 1 credit = at least 50 minutes of educational instruction
• Reporting period = 12-month calendar year (January 1 - December 31)
• CE must be completed through an Authorized Provider

How Can Other CE Satisfy the Requirement?

What Happens If CE Isn't Completed?

• IAR who fails to complete CE by end of reporting period renews as "CE Inactive"
• CE Inactive status: the registration still renews, so the IAR may continue conducting advisory business while completing the missing CE
• IAR who remains CE Inactive at the close of the next calendar year is not eligible for registration or renewal
• No carry-forward: excess credits in one period cannot be applied to a subsequent period

What CE Is Owed After a Registration Lapse?

• An IAR who was previously registered and became unregistered must complete CE for all reporting periods between de-registration and re-registration
• Exception: the IAR can satisfy this by retaking and passing the qualifying exam (e.g., Series 65) instead of completing back CE

Exam Tip: Gotchas

• CE credits do NOT carry forward. Completing 18 credits in one year does not reduce the 12-credit requirement for the following year.
• An IAR who lets their registration lapse must either complete all missed CE or retake the qualifying exam.
• FINRA dual registrants get a partial exemption. FINRA CE counts for Products and Practice only, not Ethics and Professional Responsibility.

Who Supervises IARs?

The investment adviser firm is responsible for supervising its IARs. Supervision requirements include:

• Establishing and enforcing written supervisory procedures
• Designating a supervisor responsible for each IAR's activities
• Conducting periodic reviews of client accounts handled by IARs
• Reviewing and approving advertising and client communications
• Monitoring for conflicts of interest and suitability of recommendations

The IA firm is liable for the acts of its IARs performed within the scope of employment or authority. A firm that fails to reasonably supervise an IAR can face administrative sanctions, including censure, fine, suspension, or revocation of registration.

Exam Tip: Gotchas

• Supervision is the investment adviser firm's responsibility, not the IAR's. The exam may test whether the firm or the individual is liable for supervisory failures. The firm cannot escape liability by claiming it delegated supervision to someone who failed to perform it.

What Should You Check on Exam Day?

• Can you explain why an IAR's place of business requires state registration even when the employing adviser is SEC-registered?
• Can you distinguish an exam waiver from an exemption from registration?
• Can you apply both de minimis conditions: no place of business and fewer than 6 resident clients during the preceding 12 months?
• Can you distinguish the IAR's Form U4 disclosure history from the firm's Form U5 termination filing?
• Can you distinguish the Act's prompt termination notice from the filing system's 30-day Form U5 deadline?