State-Registered Investment Adviser
Registration and Renewal Check Sheet

As of October 24, 2001, the Securities Division mandated use of the Investment Adviser Registration Depository (“IARD”) by applicants for investment adviser registration.

The IARD is a national computer database operated by the Financial Industry Regulatory Authority (“FINRA”) and 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 Securities Division. As of May 15, 2002, all applications for investment adviser representative registration must be filed on IARD.

If you have questions about the licensing process or need guidance on filling out the forms, please contact Nelda Shannon.

Filing with the IARD

General information on the system can be found at http://www.iard.com. More specifically, what you will need to do is print off the state registration entitlement packet, which can be found at http://www.iard.com/GetStarted.asp, and fill out and send to FINRA the FINRA Entitlement Agreement and the FINRA Account Administrator Entitlement Form (AAEF). In addition, 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.  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, and the address for FINRA to send your fees. Send a check to the FINRA for $150 which is the initial application fee for Washington. FINRA's initial application set-up fee is waived through October 31, 2008.

If you will be registering representatives, you will need to submit funds for them as well (See further information below). Write your IARD number on the memo line of the check and include a cover letter stating what the check is for and that you want it deposited to your Daily Account. Once your check has been deposited to your Daily Account (see http://www.iard.com/fees.asp for information on Fees and Accounting) you will be able to submit your Form ADV Part 1 electronically.  Because the form is lengthy and requires you to gather information, we recommend that you print it out and fill it in by hand so that you have all your answers ready to go when you access the online form. You can print off a paper version of Form ADV Parts 1 and II from www.sec.gov/divisions/investment/iard/iastuff.  Once you have filled out the form online and passed the electronic completeness check, you will be able to submit the form, which shows up in an initial application queue that we look at.  If you are having trouble with the completeness check, call the NASD at 240-386-4848.  

When your Form ADV Part 1 appears in our queue we will put you on “Pending” status, print off your form, set up a file, and match it up with the information you will submit on paper to the Division.

Filing with the Securities Division

You will need to send to the Securities Division (address information is at http://www.dfi.wa.gov/sd/address.htm):

• Form ADV Part II
• Financial statement
• Proposed client contract
• Proof of passing qualifying examinations/holding designations, if the applicant is a sole proprietor.
• Additional documents will be required if the adviser intends to manage a hedge fund or other pooled investment vehicle. Please contact Nelda Shannon for details.

Form ADV Part II: You can access Part II on our website, fill it out and print it, although you will not be able to save it with your text in it unless you have the full Adobe Acrobat, not just the free reader. You can access the form here. We recommend printing each page as you complete it.  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 lack of disclosure, insufficient disclosure, or conflicting disclosure, so please complete this schedule carefully (you can save your Schedule F text by copying it and pasting it into a Word document).  Remember, you will be providing Part II (or an equivalent brochure) to your clients, so please be thorough in your answers.

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 (WAC 460-24A).  If it is necessary to obtain a surety bond to meet the requirements, the form can be accessed at http://www.dfi.wa.gov/sd/iaforms.htm.

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.

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:

• Series 65

• Series 7 and 66

The approved designations are:

• Certified Financial Planner (CFP)

• Chartered Financial Consultant (ChFC)

• Personal Financial Specialist (PFS)

• Chartered Financial Analyst (CFA)

• Chartered Investment Counselor (CIC)

Investment Adviser and Investment Advisor 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. Send a check to the NASD for the amount due to fund your Renewal Account, and attach a copy of the Preliminary Renewal Statement.Do this well in advance of the final deadline date in December.

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

• Do an annual updating amendment to your Form ADV Part 1 on the IARD system.

• Review your Form ADV Part II, revise it as necessary, and submit the revised form to the Securities Division.

• File with the Division a fiscal year end balance sheet for the adviser.  If the adviser’s principal place of business is located in Washington, the balance sheet must show compliance with the net worth requirements of WAC 460-24A-170, if the adviser has custody or discretion.  Under the rule a surety bond can be obtained, if needed to make up any net worth deficiency.

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:

• Funding the adviser’s IARD Daily Account in the amount of $70 per representative ($40 of which is Washington’s initial application fee, and $30 of which is the NASD’s initial application set-up fee).



• Completing and submitting a Form U-4 on the CRD system for each representative applying for Washington registration (see Chapter 10 of the IARD Firm User’s Manual at http://www.iard.com/firm_users_man.asp for detailed information. You may also refer to the NASD'S Form Filing Scenarios for additional guidance).

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:

• Series 65

• Series 7 and 66

The approved designations are:

• Certified Financial Planner (CFP)

• Chartered Financial Consultant (ChFC)

• Personal Financial Specialist (PFS)

• Chartered Financial Analyst (CFA)

• Chartered Investment Counselor (CIC)

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 Council Association of America) -- www.icaa.org/html/cicp.html (202-293-ICAA)

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)

Additional Information

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