An advisory firm's registration covers the firm, not the people in it. Whether an employee also needs a state license, an exam and yearly education depends on what that person does each day. The exam tests whether you can tell.
An investment adviser is a firm that gives securities advice for pay. The firm registers, but the state also wants to know which individuals inside it shape what clients receive. Those individuals are investment adviser representatives (IARs).
Uniform Securities Act (USA) Section 401(g) defines who counts. An IAR can be a partner, officer, director (or a person in a similar status or function), or any other individual employed by or associated with an adviser that is registered or required to be registered in the state. Someone with a place of business in the state who works for a federal covered adviser also counts. The person must also do any of these five things:
- Makes recommendations about securities or otherwise gives securities advice.
- Manages client accounts or portfolios.
Common mistakes
- Office-only thinking for state firms: "Register only where the office is" is the federal covered rule. A state-registered adviser's representative with 6 non-institutional clients in a no-office state must register there too.
- Rounding 10% up: Rule 203A-3 needs strictly more than 10%, so 12 of 120 fails. Use $1,400,000 and $2,700,000, not the pre-June 2026 $1,100,000 and $2,200,000.
- Counting the wrong exams: The Series 7 alone or the Series 66 alone never qualifies an IAR. FINRA's Maintaining Qualifications Program never keeps a Series 65 alive. Only the EVEP extends it, for up to five years.
Bottom line
- An IAR is anyone associated with an adviser who gives securities advice, manages accounts, decides what advice is given, solicits or sells advisory services, or supervises those who do; clerical and ministerial staff are excluded.
- A federal covered adviser's supervised person is an IAR only with more than 5 and more than 10% non-qualified natural-person clients (qualified means $1,400,000 managed or over $2,700,000 net worth), and registers only where they have a place of business.
- A state-registered adviser's IAR registers in every state of business unless there is no place of business there and only institutional clients, or no more than 5 others in 12 months.
- IARs register with the state, never the SEC, by filing Form U4 on IARD with fee, exam proof and consent to service; effective noon on day 30; expires December 31.
Exam shortcut
Open every registration stem by asking which regulator the employer answers to. For a federal covered adviser, run the 203A-3 count first (strictly more than 5 and strictly more than 10%). Then look only for offices or advertised meeting places, and ignore client totals by state. For a state-registered firm, mark office states as automatic registrations, then count non-institutional clients everywhere else; six means register.
The full lesson (about 4,489 words, 30 min read) adds 2 worked examples, all 6 common mistakes, a self-check, free in the app.
Learning objectives
- D31
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