An investment adviser is any person who, for compensation, engages in the business of advising others, either directly or through publications, writings or electronic means, as to the value of securities or as to the advisability of investing in, purchasing or selling securities, or who, for compensation and as a part of a regular business, issues or promulgates analyses or reports concerning securities. The term includes financial planners and other persons who, as an integral component of other financially related services, provide the foregoing investment advisory services to others for compensation and as part of a business or who hold themselves out as providing the foregoing investment advisory services to others for compensation.
The Dodd Frank Wall Street Reform and Consumer Protection Act included amendments to the Investment Advisers Act of 1940 that changed who is subject to SEC and state registration as an investment adviser. The assets under management (AUM) dividing line between state and SEC registration has risen from $25 million to $100 million. Those with AUM of less than $100 million are subject to state registration, those with AUM $100 million or greater are subject to SEC registration.
State regulated investment advisers must be registered if they have a place of business in North Dakota or if they have more than five North Dakota clients in a 12-month period. Federal covered advisers must make a notice filing if they have a place of business in North Dakota or if they have more than five North Dakota clients in a 12-month period.
Investment Adviser Representatives
An investment adviser representative is an individual employed by or associated with an investment adviser or federal covered adviser who: makes any recommendations or otherwise renders advice regarding securities directly to advisory clients, manages the accounts or portfolios of clients, determines which recommendations or advice regarding securities should be given, provides investment advice or holds out as providing investment advice, receives compensation to solicit, offer, or negotiate for the sale of or sells investment advisory services, or immediately supervises employees in the performance of any of the foregoing.
To transact business as an investment adviser representative in North Dakota, an individual must be registered in North Dakota unless employed by or associated with an investment adviser that is exempt from registration or a federal covered investment adviser that is excluded from the notice filing requirements.
- Part 1 and Part 2 of the most recent SEC Form ADV filed through the Investment Adviser Registration Depository (IARD).
- $100 filing fee paid through the IARD.
- State registered investment advisers will file the following directly with the North Dakota Securities Department:
- An Affidavit of Investment Advisory Activity.
- A copy of the firm’s Investment Advisory Contract.
- North Dakota does not require the submission of annual financial statements.
Investment Adviser Representatives
- Form U-4 for each representative filed through the IARD.
- $50 filing fee for each representative paid through the IARD.
- Exam requirements as set forth under the Policy Statement below.
Renewals for investment advisers and investment adviser representatives are filed through the IARD. Preliminary Renewal Rosters listing the fees for all jurisdictions in which the firm is currently registered or notice filed are made available through the IARD in November of each year. The IARD sets a deadline date in December when firms must have their renewal payments completed. Firms that fail to meet the deadline to deposit sufficient funds with the IARD will be listed as Failed to Renew and will be terminated at year end. When firms are terminated, all investment adviser representatives associated with those advisers will also be terminated. The IARD will send out complete payment instructions with the Renewal Roster.
Renewal Fees are:
- $100 for investment advisers
- $50 for registered investment adviser representatives
Form ADV Updates
Every investment adviser registered by the Department shall use the IARD to promptly file updates and amendments to parts 1 and 2 of the Form ADV. Amendments must be filed at least annually, within 90 days of the end of the investment adviser's fiscal year, and more frequently, if required by the current instructions to the Form ADV issued by the Securities and Exchange Commission.
Policy Statement for Qualification Exams
Effective Date - September 1, 2001
Current Exam Requirements. A sole proprietor investment adviser or other entity with only one employee providing advisory services, or an individual representing an investment adviser or federal covered adviser seeking registration as an investment adviser representative must have a passing score on the following examinations:
Series 65 - Uniform Investment Adviser Law Exam (as modified on January 1, 2000), a North American Securities Administrators Association (NASAA) exam administered by FINRA; or
Securities Industry Essentials (SIE) Exam; Series 7 - General Securities Representative Exam (as revised on October 1, 2018), and Series 66 - Uniform Combined State Law Exam (as modified on January 1, 2000). Note that if the Series 7 exam lapses, the Series 65 will be required.
An individual who has not been registered as an investment adviser or an investment adviser representative in any jurisdiction for a period of two years shall be required to comply with the examination requirements set forth in this section.
Any individual who is currently registered as an investment adviser or an investment adviser representative in any jurisdiction in the United States on the effective date of this policy shall not be required to satisfy the examination requirements for continued registration, except that the Commissioner may require additional examinations for any individual found to have violated any state or federal securities or investment advisory law.
An individual who has not been registered as an investment adviser or an investment adviser representative in any jurisdiction for a period of two years shall be required to comply with the examination requirements set forth in paragraph 1.
Automatic Waiver. The examination requirements shall not apply to an individual who provides proof to the Commissioner that he or she currently holds one of the following professional designations awarded by and in good standing with the applicable organization:
Certified Financial Planner (CFP) awarded by the International Board on Policy for Certified Financial Planners, Inc.;
Chartered Financial Consultant (ChFC) awarded by the American College, Bryn Mawr Pennsylvania;
Personal Financial Specialist (PFS) awarded by the American Institute of Certified Public Accountants;
Chartered Financial Analyst (CFA) awarded by the Institute of Chartered Financial Analysts;
Chartered Investment Counselor (CIC) awarded by the Investment Counsel Association of America.
- Investment Adviser and Investment Adviser Representative Guidebook
- Investment Advisor Registration Depository (IARD) is an electronic filing system that facilitates investment adviser registration, exempt reporting adviser filing, regulatory review, and the public disclosure information of registered investment adviser firms and individuals.
- Qualification Exams To become registered, securities professionals must pass qualifying exams, including NASAA State Law Exams, administered by FINRA to demonstrate their competence in the particular securities activities in which they will work.
- NASAA Qualification Exam Study Guides for Series 63, Series 65, and Series 66.