IA Switch FAQ

NASAA is pleased to provide the following information about the IA Switch. This information should not be considered as the rendering of legal advice. As always, you should confirm this information with the appropriate state securities regulator. This page will be updated frequently. If your question is not answered here, please use the comment form at the bottom of this page and a response will be added to the updated FAQ.

Q: When does the new AUM threshold for investment advisers become effective?

A: Advisers registered with the SEC will have to declare that they are permitted to remain registered in a filing in the first quarter of 2012.Those no longer eligible for SEC registration will have until June 28, 2012 to complete the switch to state registration.

Mid-sized advisers registered with the SEC on July 21, 2011 must remain registered with the SEC until Jan. 1, 2012. These advisers will be required to file amendment to Form ADV between Jan. 1, 2012 and March 30, 2012. Mid-sized advisers no longer eligible for SEC registration must file ADV-W by June 28, 2012.

Mid-sized IAs not registered with the SEC as of July 21, 2011 must register with the appropriate state regulator.

Q: Should advisers begin registering with states now?

A: Advisers can initiate registration with a state now, but should check with each state to make sure that the state will not object to the adviser’s concurrent registration with a state and the SEC.

Q: Can an investment adviser register in more than one state using IARD?

A: Yes. All states use Form ADV for the registration of investment advisers. However, advisers should check with the states in which they are registering to determine what other materials, if any, a state may require to complete registration.

Q. Will I have to pay additional fees because of the switch?

A: Each state will be governed by their statutes and rules regarding fees. You will need to check with the Securities staff in each state to determine what fees will be required.

Q: Will I have to file Form U4 amendments for my investment adviser representatives?

A: No. Because the firm’s IARD number associated with the investment adviser representative does not change, there should be no effect on the existing U4 filings. However, some investment adviser representatives that may have been exempt from registration with a federal covered adviser may now need to be registered with state securities regulators.

Q: Is the AUM of $100 million firm or will there be a choice at some level?

A. The SEC has imposed by rule a “buffer” similar to that currently in place for advisers with $25 million to $30 million in assets under management. The new buffer is for IAs with AUM between $90 million and $110 million. An adviser may register with the SEC once it reaches AUM of $100 million. An adviser must register with the SEC if its AUM is $110 million or more. Once registered with the SEC, a mid-sized adviser can remain registered with the SEC as long as its AUM is at least $90 million. This means that a mid-sized adviser currently registered with the SEC may remain registered with the SEC if the adviser’s AUM is at least $90 million.

Q: What is the new schedule for IARD system fees?

A. Click here for information about the system fees. In short, 2011 systems fees for state registered firms and for investment adviser representatives will be waived.

Q: How will the system fees be affected by the switch? The fees for state RIAs is deducted on the Renewal Statements, while the fees for federal RIAs are deducted at the ADV annual update time.

A. SEC registered investment advisers that switch to state registration will be charged the state registration fee in IARD upon amending Form ADV in IARD to seek registration in a state. Fees are charged at renewal for state registrants and notice filers, at time of application for state applicants, and at time of notice filing for initial notice filers.