Becoming a financial advisor in Delaware involves registering an independent investment adviser (IA) firm of your own or serving as an investment adviser representative (IAR) for one of the many firms already registered in the state. This guide provides step-by-step instructions explaining how to register your firm and yourself at either the state level with the Delaware Securities Division or at the federal level with the Securities and Exchange Commission (SEC).
Investment adviser firms, firm principals, and investment adviser representatives must conduct business in the state full accordance with the Delaware Securities Act.
Step 1. Get Your Education
Pursue a degree. Employers place a lot of weight on degrees when making hiring decision and potential clients will also consider your level of education in their evaluation process. The specifics of your education will be available to the public through the Investment Adviser Public Disclosure (IAPD) database.
Some particularly useful degrees include:
- BA-Consumer and Family Financial Services
- BA-Accounting
- BS-Accounting
- MS-Finance
- MBA-Finance
- MS-Personal Financial Planning
- MS-Accounting
- MBA-Accounting and Finance
- PhD-Accounting
- PhD-Finance
Take the right courses. No matter what degree you choose to pursue, there are some courses that will be very helpful in preparing you for a career as a financial advisor. Some useful courses to consider:
- Statistics
- Economics
- Management
- Taxation
- Accounting
- Business law
- Marketing
- Quantitative applications in business
- Finance
- Behavior of organizations, persons and groups
- Business ethics
- Computer information systems
- Business communications
Consider your certification options. In addition to formal education, financial planning related professional designations are also valuable in preparing you to become a more successful financial advisor. These designations have similar requirements with regard to education and industry experience. Holding one of these designations makes you exempt from the exams typically required to register as an investment adviser in Delaware:
- Chartered Financial Analyst (CFA)
- Chartered Investment Counselor (CIC)
- Chartered Financial Consultant (ChFC)
- Personal Financial Specialist (PFS)
- Certified Financial Planner (CFP)
Step 2: Register Your Firm in Delaware
(Skip to Step 3 if you’ll be working as an investment adviser representative (IAR) with an existing Delaware-registered firm.)
As an investment adviser (IA) that manages less than $100 million in assets, and with your primary place of business in Delaware, you’ll register your firm with the Delaware Securities Division. Your firm will qualify for federal Securities and Exchange Commission (SEC) registration. Both state and federal registrants follow much the same process by processing registration through the Investment Adviser Registration Depository (IARD).
- Complete Entitlement Forms and send or fax them in to the address/fax number noted on the form. As a new IA firm principal proprietor, this involves designating yourself as Super Accountant Administrator (SAA). You’ll receive an email with a user name and password allowing you access to the Firm Gateway allowing you to complete the remainder of the process.
- Fund the IARD User Account to cover the following fees:
- Initial IARD set up fees for state registered investment advisors is being waived till 2013.
- $225 initial filing fee for SEC-registered advisors ($100 million or more in client assets under management)
- Delaware’s $250 initial firm filing fee
- Exam fees for all new IARs in the firm, yourself included as applicable
- Delaware’s $50 initial IAR filing fee (applicable to you and all IARs in your employ)
- Submit Form ADV through the IARD. This form details your firm’s billing practices, fee structure, employee profile, and investment philosophy.
- Complete an electronic version of Form ADV. This form outlines the new IA firm’s fee structure and investment philosophy. Form ADV is routinely made available to prospective clients.
- Mail the following documents directly to the Delaware Division of Securities, 820 N. French Street, 5th Floor, Wilmington, DE 19801:
- Investment Adviser Examination Affidavit
- Firm’s financial statements
Requirements to Transact Business in Other States
After registering in Delaware, you are allowed to conduct a small amount of financial advisory business in any other state without meeting registration requirements in that state. A small amount of business is generally defined as no more than 5 clients in any other state. With the addition of a fifth client in another state, you will be required to register in that state through the IARD system, a process that will require the payment of additional fees to that state.
Step 3: Take the Required Exam(s)
The Delaware Securities Division waives the Series examination requirements if you hold one of the following professional designations that prove education and industry experience:
- Chartered Financial Analyst (CFA)
- Chartered Investment Counselor (CIC)
- Chartered Financial Consultant (ChFC)
- Personal Financial Specialist (PFS)
- Certified Financial Planner (CFP)
- Without a waiver, you will need to complete Form U-4 Uniform Application for Securities Industry Registration or Transfer to apply for either Series 65, Uniform Investment Adviser Law Examination
OR
The Series 66, Uniform Combined State Law Examination in combination with the Series 7, General Securities Representative Examination
- You’ll be notified when your application is approved, at which time you’ll schedule to take the exam(s) through one of the Prometric Testing Centers or Pearson Professional Centers located in Delaware. Scheduling needs to be done within 120 days of your application being approved.
- Plan on arriving at the testing center at least one hour before the scheduled exam time.
- You receive your test results (pass or fail) immediately after completion of the exam.
Step 4: Ongoing Annual Renewal Requirements in Delaware
Investment Advisor Firm:
Investment adviser representative license and IA firm renewals will be completed electronically through the Investment Adviser Registration Depository by December 31st each year. Renewal fees are paid for each state in which your firm is registered and are automatically distributed to the appropriate state Securities Division/Commission. Expect the following fees:
- Yearly IARD administrative fee of $100
- Delaware’s renewal fee of $250 for the firm and
- Delaware’s renewal fee of $50 for each IAR in the firm
Investment Adviser Representatives:
As a firm representative, it is your responsibility to see to it your Form U-4 is kept current. As a firm owner or sole proprietor, you will also be responsible for keeping this information current. As an employee, contact their designated Super Account Administrator within your firm’s compliance department within 30 days of changes to the following:
- Residential address change
- Criminal record
- Jurisdictional changes
- Name change (marriage
- Civil judgments
- Customer complaints
- Education
- Disciplinary action
- Certification
- Additional business activities