This step by step informational guide will describe how to become a financial advisor in Tennessee by registering an independent investment adviser (IA) firm or pursuing registration as an investment adviser representative (IAR) employed with an existing firm. IA firms and their representatives classified as state level registrants will register with The Tennessee Securities Division. Those that qualify as federal level registrants will register with the Securities and Exchange Commission (SEC). This guide will provide registration instructions for both.
Investment advisers and representatives of investment adviser firms operating in Tennessee are expected to uphold the mandates outlined in the Tennessee Securities Act.
Step 1. Get Your Education
Many skills are necessary when choosing to pursue a career providing investment advisory services so education is extremely important. Your degree will be accessible to potential clients and regulators through the Investment Adviser Public Disclosure (IAPD) database.
Some degrees that will assist you in achieving both personal and professional success are:
- BA-Accounting
- BA-Consumer and Family Financial Services
- BS-Accounting
- MS-Personal Financial Planning
- MS-Accounting
- MBA –Finance or MBA-Accounting and Finance
- MS-Finance
- PhD-Finance
- PhD-Accounting
If you’ve already completed your degree, the following courses would be useful in refreshing your knowledge. If you are just beginning the education process, expect to take these courses in the coming years:
- Quantitative applications applied to business
- Ethics in business
- Marketing
- Statistics
- Business communications
- Accounting
- Management
- Finance
- Behavior of groups, persons, and organizations
- Taxation
- Computer information systems
- Economics
- Business law
These optional professional certifications are an incredible addition to your resume. Prior to testing for one of these certifications, you should ensure that all prerequisites have been met. A bachelor’s degree or an acceptable level of industry experience would satisfy those requirements. Professional certifications that would boost your level of advising skills and highlight your expertise:
- Chartered Financial Analyst (CFA)
- Chartered Financial Consultant (ChFC)
- Certified Financial Planner (CFP)
- Chartered Investment Counselor (CIC)
- Personal Financial Specialist (PFS)
Step 2: Register Your IA Firm in Tennessee
(This step is required to establish a new investment adviser (IA) firm. If you are planning to begin your career with an existing firm, move on to Step 3.)
An investment adviser is only required to register with the Tennessee Securities Division if managing assets that total less than $100 million. Federal level registration through the Securities and Exchange Commission (SEC) is required for firms managing more than this. Both federal and state level registration is completed through the Investment Adviser Registration Depository. The steps below describe the process for both.
- Gain access to the IARD. The FINRA Entitlement Process requires you to submit the proper Entitlement Forms. During the initial steps, the system will prompt you to assign a Super Accountant Administrator (SAA). The SAA will receive a confirmation email with further instructions on how to login to the Firm Gateway. After accessing the Firm Gateway, you will have the ability to finish the remaining steps.
- Establish an IARD User Account. The User Account must be funded adequately to cover the following costs associated with registering your IA and the IARs in your employ.
- Tennessee charges a $200 initial IA firm filing fee for state-covered advisors and $100 for federal-covered advisors
- Exam fees for each IAR in the firm
- An initial $225 filing fee for SEC-registered advisors
- Initial IARD set up fees for state registered investment advisors are currently being waived
- $50 initial state IAR filing fee charged by the state of Tennessee.
- Complete and submit Form ADV. This form basically defines the fee structure and investment philosophy of the firm. It also includes pertinent background data on all employees. Form ADV is made available to clients and prospective clients upon request.
- Complete and submit Form U-4 Uniform Application for Securities Registration or Transfer for each investment adviser representative you employ.
- Submit the following documents as an attachment to an email to securities.2@tn.gov or mail them as hard copies to Tennessee Securities Division, Broker-Dealer Section, Suite 680, 500 James Robertson Parkway, Nashville TN 37243-0583:
- Organizational documents for your firm, for example a corporate charter or partnership agreement
- Copies of the contacts and any agreements that will be used with clients
- Certified financial statements showing a minimum net capital of at least $15,000
Step 3: Take the Required Exams
If you hold any of the following professional designations you have already substantiated your knowledge and ability to act lawfully as an investment adviser. The Tennessee Securities Division waives exam requirements if you hold one of these certifications:
- Chartered Financial Consultant (ChFC)
- Personal Financial Specialist (PFS)
- Chartered Investment Counselor (CIC)
- Chartered Financial Analyst (CFA)
- Certified Financial Planner (CFP)
- In accordance with the Tennessee Securities Act, as investment adviser firm principal or representative, you must take one of the following exam(s) in order to be allowed to work in the state.
OR
- The Series 7, General Securities Representative Examination, along with the Series 66, Uniform Combined State Law Examination
Exam registration requires submission of one of this form:
- Form U-4 Uniform Application for Securities Industry Registration or Transfer will satisfy both the registration application requirement as well as the exam application.
- Scheduled your exam(s) with one of the Prometric or Pearson Professional Center testing locations in Tennessee. You will have 120 days to schedule these after the registration process is completed.
- Plan on arriving at the test site before your scheduled exam time well prepared.
- Scores are released immediately upon completing the exam.
Step 4: Ongoing Renewal and Update Requirements in Tennessee
Investment Advisor Firm:
You will use the Investment Adviser Registration Depository to complete registration renewal actions for your firm and the IARs in your firm’s employ. Both IA firm and IAR registration renewal should be completed by the December 31st deadline each year. The following fees are associated with renewing registration:
- Investment Adviser Registration Depository administrative fees of $100 are charged yearly
- Renewal fees must be paid for each state in which each of the firm’s IARs are registered
- Tennessee’s renewal fees are $200 for state-covered firms, $100 for federal-covered firms, and $50 for each individual IAR within the firm
Investment Adviser Representatives:
Your firm’s Super Account Administrator will maintain Form U-4’s for the firm’s employees within the Investment Adviser Registration Depository. As an independent investment adviser not associated with a firm, you will act as the Super Account Administrator and complete required updates on your own. Your firm should require that all employees submit amendments to the SAA in a timely manner, as this person only has 30 days to update that information. Changes to or occurrence of the following would warrant updates to Form U-4:
- Client complaints
- Civil judgments
- Disciplinary action
- Educational background
- Additional business activities
- Criminal record
- Residential address
- Name change (marriage)
- Certifications