There are loads of acronyms in the financial services industry. What is an RIA? What is an IAR? Are they used interchangeably? These are frequently asked questions by people who are considering a career in the securities and commodities industry. Read on to find out more about RIAs and IARs, and when you should properly use each term.
Although it sounds like an individual job title, a Registered Investment Adviser (RIA) refers to a firm that is registered with the Securities and Exchange Commission (SEC) or a state’s securities agency. Now, an individual who works for a RIA is an Investment Advisor Representative (IAR).
A quick Google search for RIA will reveal that many people misuse the term, instead referring to a professional designation for individuals who provide investment advice. An individual cannot be an RIA; however, the individual could have her own RIA firm. Even if that is the case, however, she is still an IAR representing her own RIA.
An Investment Adviser Representative (IAR) is an individual who works for an investment advisory company (e.g., RIA, broker-dealer) and provides investment-related advice for a fee. IARs are limited in what advice they can provide based on which licenses they hold.
According to the North American Securities Administrators Association (NASAA), three essential elements characterize an investment adviser:
No, not really. Registered Investment Adviser (RIA) and Investment Adviser Representative (IAR) both use an “e-r” in adviser because the Investment Advisers Act of 1940 defines both the terms RIA and IAR using adviser with an e-r. If the individual or firm is registered, then adviser is supposed to be spelled with an e-r.
With that being said, advisor with an “o-r” is commonly used in the securities industry. The meaning is the same whether it is spelled adviser or advisor; however, if you are writing out Registered Investment Adviser or Investment Adviser Representative, you should always use the e-r spelling because that is the way the law is written.
If you are interested in becoming an Investment Adviser Representative, the first step to getting licensed is passing the Series 65 exam, or the Series 7 and Series 66 exams. Unlike other securities licensing exams, you do not need to be sponsored by a firm or broker-dealer to take the Series 65 exam.
If you have another professional designation, such as the CERTIFIED FINANCIAL PLANNER™ mark or the Chartered Financial Analyst® charter, you may be able to waive the Series 65 exam. Check with your state for more details.
If you are considering starting your own RIA, check out this article on the important things to consider about being your own boss.
After identifying nine series exams with common content (6, 7, 22, 57, 79, 82, 86/87, 99), FINRA decided to restructure their licensing process. The common content is now tested in the new Securities Industry Essentials (SIE) exam. Download this free guide to learn more about how the new securities licensing process works, the rationale for the change, SIE tested exam content, and how it could change hiring and recruiting practices.