Providing advisory services

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Dec 23, 2009 9:50 pm

I’m interested in being able to provide advisory services.  All I want to do is give buy/sell/hold advice on equities.  I don’t plan to maintain portfolios or hold anyone’s money. All I would do is evaluate people’s portfolios and give ratings.

  My question is what licenses do I need?  Is becoming an IAR necessary?    Thanks.
Dec 23, 2009 11:35 pm

Don't be a d***.  If you don't have any input then don't put it.

Dec 24, 2009 8:49 am

Thanks iceco1d.

  If I get the Series 65, do I then need to be associated with an RIA even though I won't be managing anyones money or can I just go off and do that on my own?
Dec 24, 2009 9:23 am

If you don’t want to place trades on client’s behalf, then no, you do not need to be associated with anyone. You are essentially a fee-only financial planner.

Dec 24, 2009 10:15 am

Ok so the Series 65 would make me “legal” to make the buy/sell/hold recommendations and there is no need to register with an RIA. No series 7 or anything else? 

Is this pretty much universal from state to state or would each state be different?  I'm in Florida.
Dec 24, 2009 11:30 am

I think a 65 would be fine (and nothing more).

Dec 24, 2009 12:57 pm

you can manage up to five accounts without registering with your state

Dec 24, 2009 1:11 pm

I’m curious as to your business model.  All you are doing is giving buy/sell/hold advice.  How are you going to convince people that you know when to buy/sell/hold?  How much will you charge?

Dec 24, 2009 8:05 pm

I understand the scepticism. I’m only(maybe) doing this as a side thing. I have another career that I don’t plan on leaving anytime soon. I’ve been amateur investing for 8 years now and have done pretty well for myself(it is all relative).  I have a handful of people telling me to do it and they’d be interested in “subscribing” to my service. I don’t know if I’m going to do it.  All I wanted to find out from you guys was what is involved to make it legit.  I know there is a difference in investing your own portfolio and investing others’ money or being responsible for others’ investment decisions. I’m not sure that headache is worth it yet.

  Since what I'm doing isn't managing other peoples' money my model is very simplistic.  That is the way I want it.  This isn't going to be a primary income by any means AND it is very cheap to set up so there is little/no risk in giving it a try.   Thanks to all for the inputs. 
Dec 24, 2009 8:13 pm

colaveca - I wonder if maybe you should just write research reports. It makes little sense to evaluate portfolios, since you will likely have to do a TON of analysis.

Take me for example: I use a lot of individual equities in my clients’ portfolios. However, it would be untenable for me simply evaluate portfolios and make simple recommendations, since there is no way for me to actually evaluate that many securities responsibly (an argument that we get into quite a bit on this board).

In your case, you could end up evaluating hundreds of securities, especially when you have people call you up and ask, “what do you think about this stock?”.

What I would do is simply write research reports and post them on the internet for download. Because a buy/hold/sell scenario will only work in this case. You cannot recommend a “buy” for everybody, because since you will not be an advisor, you won’t have time for the due diligence that we have to go through AND do your analyses.

I think it’s interesting and viable, but I think you need to re-think how you will be doing this, or explain it to us so that we may better help you.

Dec 24, 2009 8:33 pm


  You make valid points.  Certainly, I would never be able to keep up with peoples' requests unless I had a staff of people.  That isn't where I'm headed. Without giving my model away too much... I would be doing basically what you suggested. I would have to control what candidates make the "rating" list in order to do proper research and still be able to keep up with maintaining it properly.   My early thoughts were to do this AND evaluate other peoples portfolio's.  I could do that probably to start with, but keeping up with it would be a bear(especially if my client list grows which is always the goal).  You may have convinced me it isn't worth it to even go down that road.   Thanks.
Dec 26, 2009 7:25 pm

Ambitious: re: "you can manage up to five accounts without registering with your state "

  I don't believe that statement to be true.  You need to check with each state as to what their regs are, re investment advisors.... assuming we're talking about state regulation and not SEC. - To do account/clients in other states, legally, is a real hassle on the state level, as you have to comply with each state, as far as filings, surety bonds or financial minimums, etc. Some states' sites I was looking at say that if you manage 1 client within their state, you need to file with their agency...
Dec 29, 2009 3:07 pm

you can manage up to five accounts without registering with your state

I think your talking about the "de minimus" Rule, which related to the sale of securities to a client located in another state. As for making recommendations each state is a little different. I would go the route of research reports also, but you would still need a disclosure of your qualifications.
Jan 19, 2010 11:14 pm

ok, so what about this, bear with me…

(Hypothetical)   I charge a fee for allowing access to my portfolio (view asset allocation and trades).  Does that make me an IAR?  I don't manage clients funds, I don't make buy/sell/hold recommendations, I don't issue rating reports.  One could construe that because I charge a fee for access to viewing my portfolio that could be deemed as a recommendation.  Don't get wrapped up in the business plan.  Just amuse me.      Also (keep above paragraph in mind w/ these questions),   If I am an IAR, it is my understanding that in order to register with the state my RIA has to submit a Form U-4.  Do I need to be associated with an RIA or can I be a sole IAR? If I pass the 65 would I be able to register with the state myself with no RIA?  ALSO, if I'm working over the internet and I intend to operate ideally in all states do I have to file individually w/ each state?  I wouldn't have a book, so filing w/ the SEC wouldn't be necessary as I understand it.  Also assume that I'd have more than 5 clients.   Thanks.    
Jan 19, 2010 11:27 pm

I assume your statement:

"You can be an IAR without being associated with an RIA." is a typo and you meant can't base on the rest of your reply.   Do you know of services that help set up my own RIA?  How about "guides" to show what the requirements are?   Thx.  
Jan 19, 2010 11:28 pm

[quote=colaveca]I assume your statement:

"You can be an IAR without being associated with an RIA." is a typo and you meant can't base on the rest of your reply.   Do you know of services that help set up my own RIA?  How about "guides" to show what the requirements are?   Thx.  [/quote]

Zach Gronich at RIA-in-a-box.  He helped me set up my RIA.  Worth every penny IMO.

You'll need to take the 65. 
Jan 19, 2010 11:45 pm

Have you considered starting an investment club for you and your buddies?

If it goes well you will have a track record to take it a larger scale yet not have to go through all the costs and hurdles to be a IAR if you do not intend to manage assets.
Jan 20, 2010 7:47 pm

Eh. Not completely interested in the “group think” idea. I’m more of a lone ranger.  I may start out having people follow along for free to build the track record, then go fee based after I get all the licences figure out.

Jan 20, 2010 9:11 pm

Another question…

  I'm not finding a clear explanation on what states I would have to register in.  If I set up an RIA and take the Series 65 and become an IAR of my RIA, then I'll have to register with a state.  I live in Florida, but would intend on having clients anywhere.  I've read one article which says you only register in the state where you physically reside.  Would I only have to register in Florida despite having clients all over?  I know of the "5 person" rule already.  That can get tediuos and expensive registering in all those states and keeping up with each states requirements.      
Jan 21, 2010 11:26 am

Well, I did more digging on this.  There appears to be an SEC exemption for Internet only operations that are not connected to a particular state.  These cases are allowed to register with the SEC.  See below: