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How to Become a
Registered Investment Advisor


The natural progression to become a registered investment advisor is to start with a large wirehouse as a stock broker. After a few years, you get fed up with the bureaucracy, being a number in a large crowd, the pressure to see the product-du-jour, and the fact that the firm cares more about its profits than the client. So you leave and join a regional or independent BD.

It's much better there, but soon the compliance becomes a nightmare. As the firm grows, the rules become suffocating. You realize that all of the business you do can be done on a fee basis because there are now many fee-based variable annuities, there are no-load funds you can manage for a fee, and the only thing you give up is accepting a front end commission. But you also realize how much better being fee-based and client-centered will position you from a marketing perspective. And you'll be able to collect fees for your advice and for plans. So you make the jump as thousands have and use the resources at this site to help you make the switch.

Steps to become an Investment Advisor

First, get your RIA certificate, which will probably be with your state at first. Their requirements are listed at here.

Most likely, you may want to have a conversation with them so you understand the requirements completely. Or, you can hire someone to get you registered and explain the process, and do your filing. See the Resources page for firms who do this. This is recommended, as a relatively minor investment will get you started correctly

Next, you may need to take an exam or maybe not. If you've been a stockbroker with a major firm, it's likely you've taken the series 7 and 65 exams, and nothing else is required other than completing the application and sending your fee (about $150 for most states). Each state's exam requirements are listed here.

While you wait for your registered investment advisor certificate, you want to investigate the various custodians. Check the forums at www.financial-planning.com and you'll find an active discussion among planners as to the pros and cons of various custodians. The biggest are Schwab, Ameritrade and Fidelity.

Once you select a custodian, you want to decide how you will manage your client's money as discussed at "How to Manage Portfolios."

Last, you need a client communication mechanism to move your clients over. I recommend a client appreciation lunch where you discuss your new services and platform and have people select a time to meet with you individually. For the next three months, you should be booked with meetings and putting money under management.

To grow your business, do seminars and marketing as described at the link below.

Tools for those who want to become
Registered Investment Advisors

 

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