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Best Broker Registration for High Net Worth Clients Reviewed by

If you’re trying to attract high net worth clients or already have them in your practice, there are a few things you should be aware of. Managing this type of clientele requires more time and expertise than dealing with more regular customers.

But that doesn’t mean you can’t improve efficiency or add value to your business. You can by adopting strategies that enable you to do more in less time.

RIA Registration Reviewed by

High net worth clients may prefer RIA registration with the Securities and Exchange Commission (SEC) over broker-dealer or wirehouse representation. RIAs are registered with both federal and state securities authorities, adhering to strict fiduciary duty rules which require them to act in their clients’ best interests at all times.

Broker-dealers specialize in purchasing and selling individual assets like stocks, while RIAs provide advice on all aspects of wealth management. To handle complex tasks like estate planning or trust formation, RIAs often hire CPAs, attorneys and other financial experts. Some firms even charge one flat rate for all services rendered; while others charge per service separately.

Most RIAs charge fees that are determined by the size of their client’s assets under management. These can range anywhere from 1% to 5% of total account value, and some charge even lower amounts than this.

Investors should inquire about the fee structure and services the firm offers before investing. Furthermore, they should review their Form ADV, which contains key details regarding their business operations and expertise.

A reliable RIA should be willing to answer questions regarding their fees, services and billing terms. This is an integral part of the due diligence process and it can give you an accurate estimation of how much you’ll pay in fees.

RIAs must file Form ADV with the SEC and state securities authorities. This form contains comprehensive documentation outlining what services the firm provides, its fees structure, billing terms, as well as other compliance details.

If a firm fails to meet these requirements, the SEC can initiate formal proceedings to deny or suspend its registration. Fortunately, most RIAs do not experience serious problems with the SEC.

The SEC’s capacity to review and investigate all RIAs is limited, meaning it cannot effectively oversee every advisor. Since 2010, the agency has only conducted a handful of reviews.

When selecting an RIA, take into account their fees, experience and track record. In the end, it’s your money and investment goals that should be the main factors in consideration.

SEC Registration Reviewed by

Registration with the SEC can be a key requirement for wealth management companies that wish to expand and provide high net worth clients with exclusive services. A recent study by WMIQ and Discovery Database revealed that SEC-registered investment advisors with these accounts experienced faster growth of assets under management (AUM) than their non-SEC counterparts.

High net worth clients require a comprehensive set of compliance and reporting requirements in order to safeguard assets and the accuracy of financial statements. This includes conducting an independent audit on those statements as well as preparing and filing all required reports with the SEC.

Asset managers are closely following a government proposal to relax criteria for who qualifies as a high net worth individual (HNWI). In June, the Securities and Exchange Commission issued a concept release asking for public comments on exemptions from registration under the Securities Act of 1933.

Asset managers that are seeking new sources of capital may benefit from changing the definition of accredited investor. Unfortunately, it appears unlikely the SEC will make such a change anytime soon; concept releases typically take years to move from draft form to final rulemaking.

Some companies have chosen not to register with the SEC, opting instead to sell their securities directly to accredited investors. These buyers are considered financially sophisticated enough to comprehend investment risks and can afford to risk more money than other investors.

Wealthy investors often access brokerage services designed to assist them with building or managing their portfolios or investments. These may include asset allocation, tax planning, and estate-planning assistance.

These firms typically charge fees in excess of $1 million annually and provide concierge-level service. Unfortunately, these costs do not include the cost to prepare and file securities transactions or tax forms with the IRS.

To become eligible for SEC registration, a firm must have been in business for at least three years with at least one registered representative, as well as possess a substantial amount of assets under management.

FINRA Registration Reviewed by

Registration with FINRA is a requirement for all firms and securities professionals engaged in the business of investing, advising or selling securities. The FINRA system contains an expansive database with information on individual firms and their employees that is regularly updated by FINRA and made accessible to the public on its website.

To become registered, you must submit a Uniform Application for Securities Industry Registration or Transfer (Form U4) to FINRA through its Central Registration Depository (CRD) system. This form collects various disclosures such as work history, outside business activities and criminal and civil actions. FINRA may also investigate any false or misleading information contained within the form.

Once registered, it is your responsibility to abide by FINRA regulations and your firm’s policies in order to maintain your license and compliancy. This includes obligatory continuing education sessions as well as regular supervision by senior management at your firm.

Recently, FINRA has made several modifications to its qualification and registration requirements. For instance, in 2017 they ruled that individuals cannot longer accept orders from customers without first becoming registered; this followed the removal of the Series 11 registration category for order processing assistant representatives.

Furthermore, FINRA’s new fingerprint process became effective for broker-dealer firms and funding portals. Under this arrangement, all transactions involving fingerprinting must be routed through Sterling — FINRA’s designated fingerprint provider — in order to be processed efficiently.

The new process enables more efficient fingerprinting, lower costs for businesses and quicker turnaround times for processing orders. Furthermore, it offers a more secure fingerprint verification procedure.

FINRA’s Central Registration Depository (CRD) program maintains the registration record for member firms, their associated individuals and affiliated funds. It processes Form filings, collects registration fees and oversees qualification exams, continuing education sessions and other regulatory reporting obligations.

For 2023, FINRA’s Entitlement Certification period runs from April 17 — June 19. Super Account Administrators (SAAs) for firms with multiple users or administrator accounts must certify that each person has sufficient access to FINRA systems in order to fulfill their job responsibilities.

State Registration Reviewed by

RIAs typically combine stocks, bonds and mutual funds to construct portfolios for their clients. They may employ various investment techniques in an effort to reduce commission expenses and enhance client diversification.

For RIA firms, federal and state registration regulations can be somewhat confusing. This is partly because the two sets of rules differ from each other.

One major distinction is the registration requirements for Investment Adviser Representatives (IARs) employed by RIA firms. State-registered RIAs must have at least one IAR registered in each state where their firm resides, while SEC-registered RIAs only need to register IARs who work with a certain number of clients.

In addition to IAR and RIA firm registrations, state regulatory authorities also have specific requirements for advisers with clients in certain states. These may include notice filings, fees and anti-fraud statute enforcement.

Before you begin, make sure you are prepared to pay the necessary registration and other fees. These costs vary by state but can range anywhere from a few hundred dollars up to thousands of dollars. Check with your local DMV or transportation agency for more information.

Registering your vehicle can be done either through the mail or online. Although the process varies by state, most will require you to verify both personal and vehicle information, fill out a registration form, pay any applicable fees and taxes or insurance requirements.

Registration can take anywhere from a few days to several months. As part of the process, you may also have to pass a smog test or emissions inspection.

Overall, state registration with the SEC can be a beneficial option for many advisers. It adds an extra layer of protection, helps prevent financial fraud and gives your clients extra peace of mind. But it can be an arduous process; thus, it is essential that your RIA assess its specific state regulatory needs regularly to guarantee you are abiding by all applicable laws and regulations.