Series 66 State Registration for IAs and Investment Adviser Representatives

Investment adviser registration rules are among the most heavily tested topics on the Series 66. The bifurcated system — where some advisers register with the SEC and others register with state regulators — creates multiple thresholds, exemptions, and exceptions that exam questions exploit. Getting these rules precise is essential.

The AUM Threshold: Who Registers Where

Investment advisers are subject to registration based primarily on the size of their assets under management (AUM):

SEC Registration (Federal Registration)

An investment adviser must register with the SEC if it has AUM of $110 million or more. An adviser may also register with the SEC if it:

• Has AUM between $100 million and $110 million and would otherwise be required to register in 15 or more states
• Is an adviser to a registered investment company (mutual fund) regardless of AUM
• Has a reasonable expectation of reaching $100 million in AUM within 120 days

An adviser between $100M and $110M AUM has a choice — it may register with the SEC but is not required to. Advisers at $110M must register with the SEC.

State Registration (State Registration)

An investment adviser must register with the state if it has AUM below $100 million and does not qualify for SEC registration. These are called state-registered advisers or mid-sized advisers (for those between $25M and $100M AUM).

Advisers with AUM under $25 million register with the state by default.

The Buffer Zone: $100M-$110M

This $10 million buffer prevents advisers near the threshold from switching registrations every year due to AUM fluctuations. An SEC-registered adviser must switch to state registration when its AUM falls below $90 million on Form ADV's annual updating amendment — not when it first dips below $100M.

Federal-Covered Investment Advisers

An investment adviser registered with the SEC is called a federal-covered investment adviser. States cannot require federal-covered IAs to register at the state level. However, states may require that federal-covered IAs:

• File notice filings (a copy of Form ADV and applicable portions of other SEC filings) in each state where they have clients
• Pay registration or notice fees to the state
• Comply with the state's anti-fraud laws

This distinction — registration vs. notice filing — is one of the most tested Series 66 concepts. Federal-covered IAs file notice filings; they do not register with the state.

Investment Adviser Representative Registration: Always at the State Level

Regardless of whether the investment adviser is federally covered or state-registered, investment adviser representatives (IARs) always register at the state level. This is not intuitive and is frequently tested.

An IAR who works for a large SEC-registered RIA must still register as an IAR with the state where they have a place of business. If the IAR has clients in multiple states, registration may be required in each state where they have a place of business or exceed the de minimis threshold.

Registration requirement: An IAR must register in a state if they:

• Have a place of business in the state, OR
• Have more than 5 clients in the state during a 12-month period and the IA is required to register in that state

The De Minimis Exemption for Investment Advisers

An investment adviser — not an IAR — may be exempt from state registration in a state where:

• The IA has no place of business in the state, AND
• Has had 5 or fewer clients who are residents of that state during the preceding 12-month period

This exemption allows a small IA to serve a handful of out-of-state clients without triggering full registration in every state. Once the 6th client in a state is served, registration is required.

The de minimis exemption does not apply to broker-dealers or their agents.

Mid-Sized Adviser Registration

Advisers with AUM between $25 million and $100 million (mid-sized advisers) register with the state rather than the SEC, unless they are subject to examination as an investment adviser in 15 or more states — in which case SEC registration is permitted. This rule is designed to reduce compliance burden for advisers who would otherwise manage multi-state registrations.

Investment Company Advisers: AUM Threshold Exemption

An adviser to a registered investment company (mutual fund under the Investment Company Act of 1940) is required to register with the SEC regardless of AUM. The AUM threshold simply does not apply. This makes sense because investment companies themselves are federally regulated, and their advisers should be subject to unified federal oversight.

Form ADV and Registration Mechanics

Investment advisers register with the SEC or state by filing Form ADV through the Investment Adviser Registration Depository (IARD) system:

• Part 1: Organizational information, disciplinary history, business description
• Part 2A: The client-facing brochure, describing services, fees, conflicts, and disciplinary information
• Part 2B: Brochure supplements for individual IARs

State-registered IAs file Form ADV with the state through IARD. Federal-covered IAs file with the SEC through IARD, and state notice filings are also submitted through IARD simultaneously.

---

The registration rules for investment advisers and IARs are precise, rule-bound, and reliably tested on the Series 66. Advisor Exam Academy's Series 66 course drills AUM thresholds, de minimis rules, and IAR registration requirements with exam-style questions and answer explanations. Start your Series 66 prep at advisorexams.com/exams/series-66.