Washington State Department of Financial Institutions

State-Registered Investment Adviser Registration and Renewal Check Sheet

The Washington State Department of Financial Institutions Securities Division mandates applicants for investment adviser registration use the Investment Adviser Registration Depository (IARD).

About the IARD

The IARD is a national computer database operated by the Financial Industry Regulatory Authority (FINRA) and is used by the states and the Securities and Exchange Commission for registration purposes.

Applicants will partially file electronically through the IARD system and partially file on paper with the Washington State Securities Division.

All applications for investment adviser representative registration must be filed on IARD.

Questions? Contact Us

Bruce Johnson
bjohnson@dfi.wa.gov
(360) 902-8781

Filing with the IARD

Below you will find instructions for filing with the IARD.

General information on the IARD system can be found on the IARD Web site.

  1. Set Up Your Account
    1. Print and review the IARD state registration entitlement packet.

    2. Send the Entitlement Agreement and the FINRA Account Administrator Entitlement Form (AAEF).

    3. If you will be registering investment adviser representatives, you will need to fill out and send the “CRD Participant—IA only” Account Administrator Entitlement Form, which will give you access to the CRD system, which is the database for representatives.

    4. In several weeks you will get a Confirmation Packet back from FINRA, which, among other information, will contain your IARD Number, User ID and Password to be able to access the system over the Internet.
  2. Fund Your Account
    Once you have received your Confirmation Packet and know your IARD Number you will need to fund your firm’s Daily Account before you can make any filings on the system.

    You will need to deposit enough funds to cover the cost of both the registration fees for the states in which your firm and its representatives will be registering and the administration fees charged by FINRA. (FINRA is currently waiving its administrative fees)

    Fees can be paid via a check or wire transfer sent to FINRA or can be paid electronically. IARD's states’ fee schedules.

    To register a firm in Washington only, you will pay $150 to cover the state registration fee.

    To register a representative in Washington only, you will pay $40 to cover the state registration fee. If you are a sole proprietor, Washington does not require you to separately register as a representative, but other states may.

    Please review Chapter 13 of the IARD Firm User’s Manual for a more thorough review of the fee paying and accounting process.

  3. File Online
    Before logging onto the system for the first time you may want to review Chapter 3: Getting Started of the IARD Firm Users Manual.

    The forms below can be filed on the IARD system. Since the forms are quite lengthy, you may want to print them off and fill them in prior to attempting to fill them out online.

    Form Downloads:

    About the Forms
    Form ADV Part 1: This form is filed electronically on IARD, and contains “check-the-box” and limited text fields. It requests basic information about the firm and any disciplinary history of the firm and its affiliates.

    Form ADV Part II: This form is required to be filed with the Division. At present you have the option of sending it directly to the Division, or uploading it to IARD. Form ADV Part II requests information on services and fees, other business activity, backgrounds of the principals of the firm, and conflicts of interest.

    This form is also required to be given to your clients. Depending on how you answer questions on Part II, you will need to provide full narrative disclosure on Schedule F (at a minimum, questions 1 and 6 require Schedule F disclosure). Schedule F is where we usually find problems that require revisions, either due to no disclosure of required items, insufficient disclosure, or disclosure which conflicts with other documents, so please complete this schedule carefully and be thorough in your answers.

    Form U4: This form is used to register investment adviser representatives.

    Once the Form ADV Part 1 has been submitted online it goes into a queue for the Division of Securities to review. We set up a file and our practice is to send you an e-mail confirming that we got the filing and requesting that you send us the documents listed in the next section.

    Help with Filing Online
    Further guidance on filing the forms can be found in Chapters 5 and 9 of the IARD Firm User’s Manual .FINRA maintains an IARD Help Desk at 240-386-4848, which can assist you with any filing problems.

Filing with the Securities Division

To file with the Washington Department of Financial Institutions Securities Division complete and mail the forms below.

  1. File Form ADV Part II (if not filed on IARD)
    1. Financial statement

    2. Proposed client contract

    3. Proof of passing qualifying examinations/holding designations, if the applicant is a sole proprietor

    4. Additional documents will be required if the adviser intends to manage a hedge fund or other pooled investment vehicle, as more fully described below
    Download Form ADV Part II from NASAA

  2. Financial Statement
    A balance sheet for the applicant should be submitted. It need not be audited, and should be dated not more than 90 days prior to the date of filing. If the applicant is a sole proprietor, it is the personal balance sheet of the applicant.

    Any applicant who has discretion to trade client accounts, or who has custody of client securities or funds, must comply with the net worth requirements of WAC 460-24A-170, which are $35,000 of net worth for custody, and $10,000 of net worth for discretion. If it is necessary to obtain a surety bond to meet the requirements, the form can be accessed at Investment Adviser forms Web page.

  3. Proposed Client Contract:
    Advisers are required to have a written contract with each client, even if the adviser is providing limited financial planning, solely recommends wrap fee arrangements, or is a solicitor. The contract must disclose:
    • the services to be provided

    • the term of the contract

    • the advisory fee

    • the formula for computing the fee

    • the amount of prepaid fee to be returned in the event of contract termination or nonperformance

    • whether the contract grants discretionary power to the adviser

    • that the contract will not be assigned by the investment adviser without the consent of the client
    The contract cannot include:
    • a performance fee arrangement unless it complies with the provisions of Section 205-3 of the Investment Advisers Act of 1940.

    • “hold harmless” or “hedge” clauses, which purport to require clients to waive potential claims they may be entitled to bring under state or federal statutes, or which seeks to hold the investment adviser to a lesser standard of care than is required by statute.

  4. Additional Requirements for Hedge Funds

    Interests in hedge funds are typically sold via a Regulation D Rule 506 offering to accredited investors, which requires an exemption filing with the Division. In addition to being accredited, investors are almost always “qualified clients” as that term is defined in SEC Rule 205-3, in order for the adviser to be paid a performance fee in addition to or in lieu of a management fee.

    In addition to the documents required to be filed that were listed in the prior sections, these additional documents must be filed with the Division as part of the investment adviser application:

    • Private placement memorandum

    • Subscription agreement

    • Limited partnership (or LLC) agreement. If the adviser is planning on using this agreement to satisfy the client contract required by WAC 460-24A-220(16), then the adviser must submit a written response to each bullet point contained in the Notice to Hedge Fund Managers (PDF)* dated September 28, 2006.

    • If an adviser does not want to be deemed to have true custody of client funds and securities (which would require the adviser to maintain a net worth of $35,000 and require annual audited financial statements of both the adviser and the fund), then it must engage an independent third party (typically an accountant or third party administrator) to approve all withdrawals from the fund’s custodial accounts. The adviser will need to file a copy of the agreement that is signed by the third party, the custodian and the adviser which provides that the custodian will not release funds or securities from the account unless the withdrawal request is approved by, and received from, the third party.

  5. Delivering the Forms

    You can email, fax, or mail the forms to DFI.

    Email: Bruce Johnson at bjohnson@dfi.wa.gov
    Fax: Attn: Bruce Johnson (360) 704-6981

    For U.S. Postal Service:
    Department of Financial Institutions
    Division of Securities
    PO Box 9033
    Olympia WA 98507-9033     		  For Overnight Delivery:
    Department of Financial Institutions
    Division of Securities
    150 Israel Rd SW Tumwater WA 98501

Sole Proprietors: Proof of Passing Qualifying Examinations

Sole proprietors must submit documentation that they have passed qualifying examinations within the last two years, been registered in Washington or another state within the last two years, or hold specified designations.

The qualifying examinations are:

The approved designations are:

Investment Adviser Representative Registration

All individuals employed by the adviser who render advisory services, manage client portfolios, solicit/refer clients, offer the services of the adviser, or supervise persons performing these functions, must register as investment adviser representatives. In addition, pursuant to WAC 460-24A-050(4) if the adviser is an entity, an officer, general partner, managing member or other person of authority must register in order to qualify the entity for registration. Representative registration is accomplished by:

Persons applying for investment adviser representative registration must have passed qualifying examinations within the last two years, been registered in Washington or another state within the last two years, or hold specified designations.

The qualifying examinations are:

The approved designations are:

See How to Apply for an FINRA Examination for information on applying for and taking the required examinations.

See Vendors Who Supply Study Materials for FINRA Examinations for information on studying for the examinations.

Information on the designations that can substitute for examinations can be found either by accessing the website of the sponsoring organization or calling the phone number:

Chartered Investment Counselor (Investment Adviser Association) -- www.investmentadviser.org (202-293-4222)

Chartered Financial Analyst (Association for Investment Management and Research) – www.cfainstitute.org/index.html (800-247-8132)

Certified Financial Planner (Certified Financial Planner Board of Standards) – www.cfp.net (303-830-7500)

Personal Financial Specialist (American Institute of Certified Public Accountants) – www.aicpa.org (212-596-6154)

In addition, prior to 1/1/2000, the Division also accepted the CIMA designation by rule. Although the designation is no longer mentioned specifically in the amended WAC 460-24A-050, the Division will continue to waive exam requirements for those applicants holding the designation.

Certified Investment Management Analyst (Investment Management Consultants Organization) – www.imca.org (303-770-3377)

Investment Adviser and Investment Adviser Representative Registration Renewal

All registrations expire annually on December 31. To renew your registration you will need to print off the Preliminary Renewal Statement from the IARD system, which is generally available the Monday following the first weekend in November. Follow the payment instructions set forth in the annual renewal bulletin. Do this well in advance of the final deadline date in December.

Within 90 days after your fiscal year ends you will need to:

Additional Information

Broker-Dealer Rules -WAC 460-20B, 21B, 22B,23B
Investment Adviser Rules - WAC 460-24A

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