As an advisor looking to start an RIA in Mississippi, there are specific guidelines you must follow. This article will explore what those are.
In Mississippi, if an advisor meets the criteria below, they must register their RIA with the state:
- The advisor’s RIA is in Mississippi
- The advisor is managing less than $100 million in AUM
- The advisor solicits financial services in the state
- The advisor manages more than five state residents
Consider hiring a compliance consultant to help you ease the registration process.
The state of Mississippi requires advisors to have one of the following professional designations: Series 65, Series 7 & 66, CFP, CFA, CIC, ChFC, or PFS.
In Mississippi, IARs must pay all registration and filing fees and must complete the following tasks:
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Submit FINRA Entitlement Paperwork
The state requires advisors to apply for an account to FINRA’s WebCRD/IARD to submit their RIA application. FINRA doesn’t supervise or regulate RIAs. The system is only for processing applications by the state. -
Form ADV Part 1 (online only)
Form ADV Part 1 discloses information about the RIA. This information includes ownership, clients, business practices, disciplinary events, and affiliations. Advisors must also include information about disciplinary events involving the advisor or their employees. Form ADV Part 1 is also for uploading ADV Part 2A and ADV Part 2B. -
Form ADV Part 2A (paper and online)
Advisors will share information about the firm’s fees, services, and disciplinary disclosure in Form ADV Part 2A. Form ADV Part 2A is also known as the Firm’s Disclosure Brochure and is given to prospective and current clients. The state of Mississippi requires this brochure to be written in simple, easy-to-read English. -
Form ADV Part 2B (paper and online)
Advisors will disclose information about their educational background, employment history, potential conflicts of interest, and any disciplinary actions. Suppose the firm has any other Executive Officers or representatives that advise clients. In that case, they must also complete Form ADV Part 2B. Form ADV Part 2B is also a brochure given to prospective and current clients and must be written in simple English that's easy to understand.
If sponsoring a wrap fee program, Appendix 1 is also required.
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Form U4
Using Form U4, advisors will register Investment Advisor Representatives (IARs). -
Client Advisory Contract
Mississippi requires RIAs to meet specific regulatory standards for client advisory. This filing ensures that your RIA is compliant with these standards.
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Bonding and Financial requirements
If an IA has no discretion or custody, the IA must be solvent. If an IA has discretionary authority, the IA must maintain a minimum net worth of $10,000 or obtain a $10,000 surety bond. If an IA has custody of client funds or securities, or requires prepayment of advisory fees 6+ months in advance & in excess of $1,200, the IA must have a minimum net worth of $35,000 or obtain a $30,000 surety bond. All IA’s must also submit the most recent audited balance sheet at the end of the adviser’s fiscal year, prepared in accordance with GAAP standards. This audit must be conducted by an independent CPA, in accordance with generally accepted audit standards. The balance sheet must be accompanied by the CPA’s opinion as to financial position and a note stating the principles used to prepare the document, basis of included securities and any other clarifying information. If the audited balance sheet is dated more than 45 days prior to ADV submission, an unaudited balance sheet must also be submitted.
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Business documents
The state requires applicants to include a copy of the Articles of Incorporation (or Articles of Limited Partnership) certified by the government agency where they were filed. Firms must also provide a Consent of Service and their website’s URL.
If you’re seeking approval as a state RIA for the first time, you will need to complete the following:
- IARD/CRD Access & Authentication
- SAA Creation & FINRA Entitlement
- E-billing establishment & processing
Additional documents that Mississippi may require:
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Privacy Policy Statement
Advisors must provide their clients with a Privacy Policy Statement at the start of the relationship and every year after that. The policy must explain how the firm manages, protects, and discloses client information. While the policy is uniquely written for the firm, it must meet specific rules provided by the State of Mississippi. -
Policies and Procedures Manual
RIAs must have a Policies and Procedures Manual containing internal process guidelines. Such things to include are how to deal with customer complaints to how to train new IARs. Also, the manual should include information on important policies such as Business Continuity Plans, Anti-Money Laundering, Information Security, and Anti-Insider Trading Plans. -
Code of Ethics
The state sets specific fiduciary standards that RIA’s must abide by.
This filing ensures that the RIA meets those standards.
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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.
