An advisor launching an RIA in Arizona must follow specific requirements and guidelines. This article will cover how to start an RIA in the state.
For advisors, if you meet the following criteria set by the state of Arizona, you must register your RIA: You have an active business in the state, manage less than $100 million in AUM, solicit your financial services in the state, or are managing assets for more than five Arizona state residents.
Hiring a compliance consultant to help you set up an RIA in Arizona might be an excellent investment.
Arizona requires that advisors have one of the following professional designations: Series 65, Series 7 & 66, CFP, CFA, CIC, ChFC, or PFS.
Advisors must complete and submit the following forms and policies to start an RIA in Arizona:
In addition to paying all the registration and filing fees, IARs must complete the following tasks and submissions with the state:
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Submit FINRA Entitlement Paperwork
Arizona requires advisors to submit their registered investment advisor application through FINRA’s WebCRD/IARD online system. To use FINRA’s system, an advisor must apply for an account. Keep in mind that FINRA doesn’t regulate or supervise RIAs. -
Form ADV Part 1 (online only)
Form ADV Part 1 contains information about the RIA: Ownership, clients, business practices, disciplinary events related to the advisor or its employees, and any affiliations. Since this is the online component of the ADV, it’s also used to upload ADV Part 2A and ADV Part 2B. -
Form ADV Part 2A (paper and online)
An advisor will share information about the RIA’s fees, services, disciplinary disclosures, and other information related to the firm in Form ADV Part 2A. Form ADV Part 2A is also known as the Firm’s Disclosure Brochure. The state requires it to be given to prospective and current clients and be written in plain, understandable English. -
Form ADV Part 2B (paper and online)
Form ADV Part 2B will have information about the advisor, such as their education, employment history, potential conflicts of interest, and any disciplinary actions. Also, any Executive Officers or representatives who advise clients must complete this form.
This is also considered a brochure and is often given to clients.
If sponsoring a wrap fee program, Appendix 1 is also required. -
Form U4
This form registers your firm's Investment Advisor Representatives (IARs).
Financial statements & other documents
The application should also include financial reports and an audited balance sheet (if required), and a notarized affidavit of adviser activity (from any officer, director, partner, trustee, or manager). Additional requirements apply to sole proprietors, which can be found on the state’s website.
Additionally, if you’re seeking approval as a state RIA for the first time, you will need to complete the following:
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- E-billing establishment & processing
- SAA Creation & FINRA Entitlement
- IARD/CRD Access & Authentication
Arizona may also require the following documents and processes:
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Client Advisory Contract
Arizona requires that regulatory standards for client advisory contracts be met. -
Privacy Policy Statement
The Privacy Policy Statement must be given to all clients at the start of the working relationship and every year after that. An RIA must explain how they handle, store, and disclose client information. The Privacy Policy Statement will be unique to each RIA, but it must meet the state of Arizona’s compliance requirements. -
Policies and Procedures Manual
This document is an internal manual that RIAs will use to adhere to internal processes and procedures. The Policies and Procedures Manual has information from how the RIA handles client complaints to how it trains new IARs. It must also have guidance on Business Continuity, Anti-Money Laundering, Information Security, and Anti-Insider Trading plans. -
Code of Ethics
This filing ensures the state that the RIA meets the specific fiduciary standards set forth by Arizona.
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*Altruist and its affiliates do not provide legal advice, so it’s important to check with a qualified professional for each state’s registration requirements.
