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New Jersey Investment Adviser Bond

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What are the bond requirements for New Jersey investment advisers?

According to Chapter 47A, Title 13 of the New Jersey Administrative Code, investment advisers with custody of their clients’ funds or securities must have a net worth of $35,000 or a surety bond of $35,000. If you are an investment adviser with discretionary authority over client funds or securities but do not have custody of them, you must maintain a net worth or hold a surety bond of $10,000. 

If you are an investment adviser charging prepaid advisory fees of more than $500 per client six or more months in advance, you must maintain a positive net worth at all times.

How much does an investment adviser bond cost in New Jersey?

The New Jersey Division of Consumer Affairs Bureau of Securities requires some investment advisers to post surety bonds to work within the state legally. The required bond amount varies based on the volume of funds the adviser has authority over. Applicants must verify their required bond amount with the state before bonding.

Depending on the bond amount, an applicant with exceptional credit may qualify to pay a premium of as little as 1% of the total bond amount. Applying for a free bond quote is the best way to find out exactly how much you’ll pay.

Bond Type
$10,000Investment Adviser BondDoes not have custody of client funds or securities and has minimum capital of less than $10,000
$35,000Investment Adviser BondCustody of client funds or securities and has minimum capital of less than $35,000

What is a New Jersey investment adviser bond?

New Jersey investment adviser bonds ensure that investment advisers do not misuse or misapply clients' funds or securities. Principals (investment advisers) must perform all obligations as licensed under the New Jersey Administrative Code. Specifically, the bond guarantees that the principal accounts for all money and securities entrusted to them for the use and benefit of consumers.

If an investment adviser fails to conduct business lawfully, a claim can be filed against the bond. The bond protects consumers from financial loss up to the total bond amount for valid claims.

What’s the fine print?

The surety bond is in effect for two years and must be renewed unless claimed against or canceled. However, the right to bring action against the bond continues for two years from awareness of a grievance for aggrieved parties. A surety can cancel the bond if they give the principal and obligee 90 days’ written notice.

How to become an investment adviser in New Jersey

Along with posting a surety bond in the appropriate amount the applicant must also submit the following:

  • Proper forms and registration
  • An annual investment adviser exam
  • A $200 annual fee

For complete licensing and bond information, refer to the Additional Resources section below. Begin the licensing process by purchasing the surety bond you need!

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Call 1 (800) 308-4358 to talk with a Surety Expert