In Kentucky, an advisor must follow specific guidelines to register their RIA. This article will share what those are so advisors can be prepared.
Advisors living in Kentucky, advising Kentucky residents, or soliciting their services in Kentucky must register with the state.
In case it seems overwhelming to do this on your own, you may consider hiring a compliance consultant.
Financial statement requirements for Kentucky:
Advisors must have one of the following professional designations to operate in the state: Series 65, Series 66 and Series 7, CFP, CFA, CIC, ChFC, or PFS.
Form and policy requirements for starting an RIA in Kentucky:
To register an RIA, Individual Advisor Representatives (IARs) must pay all the filing fees and complete the following tasks and submissions with the state:
- Submit FINRA Entitlement Paperwork
To be clear, FINRA doesn’t supervise or regulate RIAs, but Kentucky uses FINRA’s system to process registered investment advisor applications. Due to this, every IAR looking to start an RIA must apply for access to FINRA’s Web CRD/IARD online system to complete their registration process.
- Form ADV Part 1 (online portion)
Form ADV Part 1 is the online component of the ADV, and it’s all about the RIA only. In this part, the advisor will disclose all the information related to the firm, such as ownership, clients, business practices, disciplinary events related to the advisor or its employees, and any affiliations.
This is also used to upload ADV Part 2A and ADV Part 2B.
- Form ADV Part 2A (paper and online)
This is the RIA’s disclosure brochure. An advisor will share information about the RIA’s fees, services, disciplinary disclosures, and other details about the firm. The state requires this paper brochure to be written in easy-to-read English and given to all prospective and current clients.
- Form ADV Part 2B (paper and online)
This is also a brochure that most times are given to clients. Form ADV Part 2B will have details about an advisor’s education, employment history, potential conflicts of interest, and any disciplinary actions. It should also be noted that any Executive Officers or representatives who advise clients must complete this form.
- Client Advisory Contract
Kentucky requires this filing to ensure the RIA follows the regulatory authority standards for client advisory contracts.
- Code of Ethics
This filing is required to show the state that the RIA aligns with the fiduciary standards required by Kentucky.
- Policies and Procedures Manual
This is the supervisory document the RIA will use to maintain and uphold the firm’s internal processes across the business. All procedures must be included, from how the RIA handles client complaints to how it trains new IARs. It must also have information on Anti-Insider Trading plans, Business Continuity, Anti-Money Laundering, and Information Security.
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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.