This article will cover the specific requirements and guidelines to start an RIA in Arkansas.
Arkansas requires that advisors who meet the following criteria must register their RIA with the state: The RIA is in Arkansas, they solicit their financial services in Arkansas, the advisor manages less than $100 million in AUM, or is managing assets for more than five Arkansas state residents.
Consider hiring a compliance consultant to help set up an RIA in Arkansas.
Arkansas requires that advisors have one of the following professional designations: Series 65, Series 7 (or job-specific equivalent FINRA exam[s]) & 66, CFP, CFA, CIC, ChFC, or PFS.
In addition to paying all the registration and filing fees, IARs must complete the following tasks and submissions in Arkansas:
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Submit FINRA Entitlement Paperwork
To file a registered investment advisor application in Arkansas, IARs must apply for an account to FINRA’s WebCRD/IARD online system to submit their RIA application. FINRA does not supervise or regulate RIAs, but the state uses the system to process applications. -
Form ADV Part 1 (online only)
This part of the ADV will disclose information about the RIA: ownership, clients, business practices, disciplinary events related to the advisor or its employees, and any affiliations. Form ADV Part 1 is also used to upload ADV Part 2A and ADV Part 2B. -
Form ADV Part 2A (paper and online)
Form ADV Part 2A contains information about the RIA’s fees, services, disciplinary disclosures, and other information related to the firm. This also serves as the Firm’s Disclosure Brochure and must be given to prospective and current clients. Arkansas also requires that it be written in plain, understandable English. -
Form ADV Part 2B (paper and online)
This brochure will provide information about the advisor: education, employment history, potential conflicts of interest, and any disciplinary actions. Also, any Executive Officers or representatives who advise clients must complete this form. Form ADV Part 2B is also given to clients and must be written in plain English.
If sponsoring a wrap fee program, Appendix 1 is also required. -
Form U4
Form U4 registers the firm’s Investment Advisor Representative (IARs).
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Financial statements & Bonding
Upon applying for registration in the state, RIAs are required to submit an unaudited balance sheet prepared in accordance with GAAP and certified by the Chief Financial Officer (CFO) of the firm (or the applicant if no CFO exists), within 30 days of the filing.
If the applicant has been in business for more than one year preceding the filing of the RIA application, it may submit an audited financial statement for the last fiscal year along with an unaudited balance sheet dated within 30 days of filing the application.
If the RIA will have custody of client funds or securities, it must provide audited financial statements and secure a corporate surety bond of $50,000 covering the RIA and each of its IARs. Regardless of custody, all RIAs registered with Arkansas must maintain a minimum net capital of $12,500. -
Client Advisory Contract
This filing ensures the RIA meets Arkansas's regulatory standards for client advisory.
If you’re seeking approval as a state RIA for the first time, you will need to complete the following:
- SAA Creation & FINRA Entitlement
- IARD/CRD Access & Authentication
- E-billing establishment & processing
Additional documentation:
Arkansas also requires an Independent Contractor Acknowledgement Form, which can be found on the state’s website.
Arkansas may also require the following documents and processes:
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Policies and Procedures Manual
The Policies and Procedures Manual is an internal guide to uphold internal processes and procedures. Within the manual, there will be information about how the RIA handles clients’ complaints to how it trains new IARs. It will also include information about Business Continuity, Anti-Money Laundering, Information Security, and Anti-Insider Trading plans. -
Privacy Policy Statement
The Privacy Policy Statement should be unique to the RIA but must meet the state’s compliance requirements. This document must explain how the firm handles, stores, and discloses client information. It must also be given to clients at the start of the working relationship and every year after that. -
Code of Ethics
RIA’s must meet Arkansas’ specific fiduciary standards, and this filing ensures that.
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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.
