How much does an investment adviser bond cost in Utah?
The cost of a registered investment adviser bond depends on the bond amount required and a review of the applicant’s financial history, however, it starts at 1% of the required bond amount for highly qualified applicants. The required bond amount depends on the authority of the investment adviser over the funds. Advisers with custody of funds must post a $35,000 bond, and advisers with discretionary authority must post a $10,000 bond.
Why do registered investment advisors need a bond?
The Division of Securities of the Utah Department of Commerce requires investment advisers to post a surety bond to be licensed and registered to legally work within the state.
Utah investment adviser bonds are put in place to ensure that principals (investment advisers) are authorized by the Utah Uniform Securities Act to appointment representatives to represent and assist them in rendering advice regarding securities. More importantly, the bond guarantees that advisers truly report the names and addresses of all representatives employed to the Utah Division of Securities and that advisers comply with the provisions of Utah Administrative Code at all times.
Terms of a registered investment advisor bond in Utah
Utah investment adviser bonds remain in force and full effect unless previously canceled or until they expire on December 31 of the license year, which must be indicated on the bond form.
The surety can cancel the bond by giving 60 days’ written notice prior to cancellation to the Utah Division of Securities in Salt Lake City, Utah. A copy of the cancellation notice must be sent by registered mail to the adviser.
What does an investment adviser do?
In Utah, an investment adviser is defined as someone who provides advice on securities for compensation. Investment advisers can render that advice in numerous ways, including:
- Issuing reports or analysis on securities
- Making recommendations to buy or sell securities
- Managing a client’s securities portfolio
- Preparing financial plans that involve securities recommendations
- Managing an investment fund that allows for the investment in securities
How to become an investment adviser in Utah
To become a registered investment adviser in Utah, applicants must complete the following steps:
- Register the business entity with the Utah Division of Corporations
- Apply and file any required forms and pay fees through the Investment Adviser Registration Depository (IARD)
- $100 fee for investment adviser license (new and renewal)
- $50 fee for investment adviser representative license (new and renewal)
- $100 fee for federal-covered adviser notice filing fee
- Complete Form ADV through IARD:
- Specify whether the adviser is registering with the SEC or licensing with the state
- Detailed information about the proposed advisory business and clients as a firm brochure
- The firm brochure provides clients with information about the investment adviser including its owners and management, services and fees, any other or affiliated businesses, disciplinary information, any conflicts of interest, brokerage practices, etc.
- Depending on the nature of the advisory business, a firm may have multiple versions of its firm brochure
- Appoint a designated official (a partner, officer, director, sole proprietor, etc.) to be licensed as an Investment Adviser Representative of the adviser
- The investment adviser must also submit a written notification to the Division that details:
- Who the designated official for the investment adviser is
- Whether the investment adviser will have either custody of or discretionary authority over client funds and securities
- Proof the adviser has met the applicable bonding requirement on Form 4-5BIA
The review process could take as long as 30 days once all documentation is submitted. The Division will notify the registered investment adviser once their license is approved, but will not send any official notification or certificate. The applicant can always view their licensing status through the IARD system, and the public can verify if an investment adviser is licensed through the SECʼs Investment Adviser Public Disclosure website.
Renewing a registered investment advisor license in Utah
All licenses (both investment adviser and investment advisor representatives) expire annually on December 31.
Toward the end of each calendar year, licensed investment advisers receive communication from FINRA regarding the renewal process. Licenses are automatically renewed as long as the investment adviser has enough funds in their IARD account to cover the renewal fees for themselves and all of their IA representatives.
The Division is available to answer any licensing questions and assist investment advisers through the licensing process at (801) 530-6600 or by sending an email.