Skip to content

Frequently Asked Questions for Investment Advisers

Do you have questions about investment adviser requirements in Minnesota?

  • What is an investment adviser?
    An investment adviser is an individual or a firm in the business of giving advice regarding securities to clients. For example, individuals or firms that receive compensation for giving advice on investing in stocks, bonds, mutual funds, or exchange traded funds are investment advisers. Some investment advisers manage portfolios of securities as well.

  • What is the difference between an investment adviser and a financial planner?
    Most financial planners are investment advisers, but not all investment advisers are financial planners. Some financial planners assess every aspect of your financial life—including saving, investments, insurance, taxes, retirement, and estate planning—and help you develop a detailed strategy or financial plan for meeting all your financial goals. 

    Others call themselves financial planners, but they may only be able to recommend that you invest in a narrow range of products, and sometimes the products offered are not securities.

    Before you hire a financial professional, you should know exactly what services you need, what services the professional can deliver, any limitations on what they can recommend, what services you are paying for, how much the services cost, and how the adviser or planner is paid.

  • What is the Department of Commerce Investment Adviser Examination Program?
    As a result of changes to Federal Securities laws, the State of Minnesota will now be responsible for the supervision of more than 375 investment advisers in the state.  A function of this oversight will be to periodically examine each investment adviser to ensure they are in compliance with State Securities laws.

  • When will the examination program start?

    The examination program will commence with the Investment Adviser switch date of June 28th.


  • Where will the exams take place?
    Some examinations may be unannounced.  Some exams, on the other hand, will commence with a written notice to the examinee from the Minnesota Department of Commerce Securities Unit, accompanied by an advance request for information.  Review of the advance request information will take place at the offices of the Department of Commerce.  Whether or not the examination is announced, in most cases, the examiners will make an onsite visit for a review of books, records, business operations and compliance procedures.

  • What does an examination consist of?
    For a detailed explanation of the examination process, go to

  • As a result of the Dodd-Frank Act, which investment advisers must switch from SEC oversight to state registration?


    Between January 1 - March 30, 2012: Every investment adviser, regardless of his or her fiscal year end date, must file an amendment to FORM ADV to update the assets under management (AUM) section. Investment advisers then have until June 28, 2012 to file Form ADV-W to withdraw their registration with the SEC.


    After the amendment is filed, the SEC will determine whether the adviser is required to withdraw SEC registration and register with the appropriate state(s).


    Before June 28, 2012: An investment adviser may switch to state registration if the SEC determines that the adviser’s AUM is less than $100 million as reported on the Form ADV filed between January 1-March 30, 2012. The SEC has established a “buffer” for those investment advisers holding assets between $90 and $110 million in AUM.


    An investment adviser must transition to state registration if the SEC determines that the adviser’s AUM is less than $90 million as reported on the Form ADV filed between January 1 - March 30, 2012.

     

  • When does the new AUM threshold for investment advisers become effective?

    Those no longer eligible for SEC registration will have until June 28, 2012 to complete the switch to state registration although, initial ADV Forms should be submitted by March 31, 2012.

     

  • What does it mean to be a state registered investment adviser?

    Investment advisers and their representatives who are subject to state registration are required to meet the minimum qualifications standards. In addition, state registered investment advisers will be subject to the state’s net capital requirements, books and records requirements, and field examinations. State registered investment advisers are required to submit financial statements and designate at least one qualifying supervisor.

     

  • Who needs to be registered as an investment adviser

    Minnesota Statutes 80A and Minnesota Rules 2876 require all investment advisers to be registered in Minnesota unless a specific exception applies. These laws set forth definitions for who qualifies as an “investment adviser”. The statutory framework is designed to hold investment advisers responsible for the conduct of investment adviser representatives. If you are uncertain as to whether or not you need to register, you may wish to consult with counsel to ensure compliance with the law.

     

  • Can an investment adviser register in more than one state using IARD?

    Yes. All states use Form ADV for the registration of investment advisers. However, advisers should check with each state in which they are registering to determine what other materials, if any, a state may require to complete registration.

     

  • What fees will I have to pay in Minnesota because of the switch?

    Investment Advisers will continue to pay the same registration amount they paid prior to the switch. In Minnesota, that fee is $100 annually.

     

  • Is the AUM of $100 million firm or is there a “buffer zone”?

    The SEC has imposed by rule a “buffer” similar to that currently in place for advisers with between $25 million to $30 million in assets under management. The new buffer is for IAs with an AUM between $90 million and $110 million. An adviser may register with the SEC once it reaches AUM of $100 million. An adviser must register with the SEC if its AUM is $110 million or more. Once registered with the SEC, a mid-sized adviser can remain registered with the SEC as long as its AUM is at least $90 million. This means that a mid-sized adviser currently registered with the SEC may remain registered with the SEC if the adviser’s AUM is at least $90 million.

     

  • If I have a complaint about an investment advisor registered with the State of Minnesota, what should I do?


    Fill out the complaint form and submit to the Department of Commerce.


    The Minnesota Department of Commerce
    Consumer Protection and Education Division
    85 7th Place East, Suite 500
    Saint Paul, Minnesota 55101


  • If I have more questions about registering as an investment adviser in Minnesota, who do I contact?

    Please contact Diane Walters with Investment Adviser registration questions at: diane.walters@state.mn.us.