California investment advisers and financial planning firms may be subject to both federal and state requirements depending on their business, assets under management and activities. At state level, investment advisers are regulated by the California Department of Financial Protection and Innovation (DFPI).
Registering as an Investment Adviser in California
Investment adviser firms that are required to register with California generally apply through the Investment Adviser Registration Depository (IARD) and file Form ADV.
California also has requirements for individuals acting as Investment Adviser Representatives (IARs). Depending on the circumstances, an IAR may need to satisfy examination requirements through the Series 65 or a combination of the Series 7 and Series 66. Certain professional designations and other circumstances may qualify for exemptions.
Registration should not be treated as a one-time process. Firms need procedures for keeping information current and dealing with changes involving their representatives.
California Financial Requirements
California imposes financial requirements on certain state-registered advisers.
For example, an adviser with its principal place of business in California that has custody of client funds or securities is generally required to maintain a minimum net worth of $35,000. An adviser with discretionary authority but not custody is generally subject to a $10,000 minimum.
Different requirements can apply where advisers accept substantial advisory fees in advance.
Documentation and Compliance
Registration is only one part of running an advisory practice. Advisers also need to consider their disclosure documents, client agreements, books and records, advertising, privacy obligations and procedures for documenting the advice provided to clients.
Clear client records can be particularly important when demonstrating how information was collected and how financial recommendations were developed.
Asset-Map gives financial professionals a visual way to organise a client’s financial information and maintain a clearer record of the planning process. It can form part of a wider technology and documentation process established by the advisory firm.
This information is provided for general educational purposes and is not legal or compliance advice.