Note: this page was updated on May 2, 2024.
For financial advisors, going independent offers clear advantages: the ability to better serve your clients, the freedom to run your business how you please, and the opportunity to grow unhindered by the constraints of a wirehouse or larger firm.
If you’re a New Jersey advisor weighing a move to independence, you’ll need to understand the RIA registration process from front to back. In this step-by-step guide to becoming an RIA in New Jersey, we cover the state’s specific regulatory landscape, what it takes to establish a practice there, and what it will cost to do so.
Who is required to register in New Jersey?
If you manage less than $100 million in assets, serve more than five residents in New Jersey, and/or market your services there, you typically must register with the state as an RIA. Note: New Jersey does include a buffer of $90-$110 million within this requirement to account for natural fluctuations in AUM. If you manage assets exceeding $110 million, you may need to register with the SEC instead.
The state registration process is overseen by the New Jersey Bureau of Securities, and involves numerous steps and requirements which we’ll cover below.
What licenses does an RIA need in New Jersey?
To become an RIA in New Jersey, you must first pass certain examinations or hold specific professional designations. The most common requirement is passing the Series 65 exam.
Alternatively, you can pass the Series 66 and Series 7 exams combined, or obtain other appropriate designations such as CFP, CFA, CIC, ChFC, or PFS. These licenses demonstrate your knowledge and expertise in the field of investment advising.
For a comprehensive look at how to start a successful RIA – in New Jersey, or any other state – check out our Going Independent Series, which covers everything you’ll need to know about the jump to independence: from compliance set up, to transitioning existing clients, to scaling your new independent firm.
How to register as an RIA in New Jersey
Registering to become an RIA in New Jersey requires advisors to complete all necessary documentation, as well as set up ongoing procedures to ensure they remain in compliance. The basic process is outlined below:
- Prepare Your Documents: Gather all necessary documents, including Form ADV, financial statements, and disclosure documents. Ensure all information is accurate and current. Many of these documents can be found on the website of the NJ Bureau of Securities.
- Register with FINRA: Create an account with FINRA's WebCRD/IARD online system. This is where you will submit your registration application and other required documents.
- Pay Registration Fees: Pay the required initial and renewal state registration fees through the Investment Adviser Registration Depository (IARD) system.
- Complete Form ADV: Fill out Form ADV Part 1 and provide brochures in Form ADV Part 2A and Part 2B. These forms will provide detailed information about your firm and its services.
- Establish Policies and Procedures: Develop the necessary policies and procedures for your firm, such as a Policies and Procedures Manual, Client Advisory Contract, Code of Ethics, Privacy Policy Statement, Anti-insider Trading Policy, and Business Continuity Plan.
- Register Investment Advisor Representatives: Investment advisor representatives (IARs) will also need to register individually. They must complete Form U4 on CRD and meet the examination or designation requirements.
- Maintain Compliance: Once registered, it's crucial to stay compliant with all regulatory requirements. This includes updating your Form ADV annually, paying renewal fees, and ensuring that your policies and procedures are up to date.
Financial statement requirements for RIAs in New Jersey
Part of the registration process requires RIAs in New Jersey to submit basic financial statements for the business, including a balance sheet and income statements. Whether prepared by the advisor, an accountant, or someone else on your team, they must provide a clear picture of your firm's financial health.
New Jersey also sets specific net capital requirements for RIAs, the amounts of which depend on how client assets are handled.
- Firms that do not hold custody over client assets must remain solvent at all times.
- Firms that have discretionary authority over client funds must maintain a minimum of $10,000 in net capital.
- Firms that hold custody of client assets must maintain a minimum net capital of $35,000.
How long does it take for RIA registration approval in New Jersey?
The process of registering as a Registered Investment Advisor (RIA) in New Jersey typically spans between 45-90 days, starting from when you first initiate the process until the NJ Bureau of Securities officially confirms the filing.
Once you submit the required documents and pay the registration fees, state regulators typically review your RIA registration application within 45 days. During this review period, you might receive what’s called a "deficiency letter" from the state asking for additional details or clarifications about your application.
Responding to a deficiency letter demands careful consideration. Advisors should address any concerns promptly and thoroughly to facilitate a smooth approval process.
RIA forms and policies checklist for New Jersey
To help you navigate the RIA registration process in New Jersey, here's a checklist of forms and policies you'll need:
- Form ADV Part 1 (online)
In this portion of the ADV, RIAs will disclose information about how they conduct business. The information includes details about the advisor's business and ownership structure and any affiliations related to business practices, clients, and additional information about employees. Part 1 is also used to upload ADV Part 2A and Part 2B.
- Form ADV Part 2A (paper and online)
Form ADV Part 2A is your firm's brochure that details the RIA's services, fees, disciplinary disclosures, and other details. As with other states, New Jersey requires it to be written in plain English.
- Form ADV Part 2B (paper and online)
Unlike 2A, this part is all about the advisor. It contains information about the advisor's employment, education, conflict of interest, and disciplinary information. Anyone else at the firm giving investment advice to clients, including each IAR as well any Executive Officers, must also have a Form ADV 2B.
Both of these brochures are given to your clients, prospective and current.
- Business Formation Documents
Copies of articles of incorporation, partnership agreement or articles of organization depending on your firm’s business structure, and any amendments.
- Financial statements
These are your balance sheet and income statements, discussed above.
- Policies and Procedures Manual
For your Policies and Procedures Manual, you must include your RIA’s internal policies on all parts of your business. From handling clients’ complaints to training new advisors to join your firm – every policy and procedure you practice at your RIA must be included and explained in this manual.
Additionally, you will need to include your RIA’s Information Technology Policy, Anti-insider Trading Policy, Business Continuity Plan, and Anti-money Laundering Policy.
- Client Advisory Contract
In this contract, you will detail the relationship your RIA will have with your clients. This contract is also required to meet the regulatory authority standards for client advisory contracts in New Jersey.
- Code of Ethics
This formal document outlines the ethical and professional standards expected of advisors registered with the SEC or New Jersey regulators. The code of ethics ensures advisors act in the best interests of their clients, promoting integrity, fairness, and honesty in all their professional activities.
- Privacy Policy Statement
Your RIA’s Privacy Policy is given to your clients at the beginning of your agreement and must be shared on an ongoing basis annually. It must explain how the firm stores and handles client information.
Your policy should be tailored to your RIA’s specifications and must meet the state of New Jersey’s compliance requirements.
Ready for independence?
Starting your own RIA in New Jersey and working your way through the registration process will take some time, but having the right custodian and the right tools at your disposal can help make the path to independence much more manageable.
About Altruist
Altruist helps advisors seamlessly transition to a modern custodial platform built specifically for RIAs. Simplify your tech stack, reduce overhead, delight your clients, and grow your business. True independence awaits.
If you're ready to make the leap, our team of experts is here to help you navigate the path to forming an RIA in New Jersey – schedule a call today.
Still deciding? Explore our in-depth RIA Launch Kit that includes even more detail about the essential steps to get your RIA off the ground in New Jersey and beyond.
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.
