August 8, 2013

Minnesota IARs - New Registraton Rule Extended

The new Minnesota IAR rule that went into effect on Effective August 1, 2013, will be extended until at least October 31, 2013.

The new Minnesota registration rule requires that all individuals that provide fee-based advice must register as investment advisor representatives ("IARs"). This aligns the Minnesota rule with registration requirements for nearly every other state. The rules will require formal registration as a IAR if you have a place of business in the state or have more than 5 clients. Further, IAR registration will require an annual registration fee paid through the FINRA system.

While the effective date was August 1, 2013, it should come as no surprise that the FINRA managed CRD system is not ready to accommodate this update. Minnesota now estimates that it must extend the effective date to at least the last week in October 2013.

Below is a brief summary of the requirements:

  • What is required? If your firm is subject to registration in Minnesota, your IARs will need to be properly registered as well. IARs will be required to pass a Series 65 or 66 exam or have an acceptable exemption (CFA, CFP, ChFC, PFS, or CIC designation in good standing.
  • When must one register? The new rule is effective 8/1/13, however the FINRA CRD system is being coded to accept these new requirements for Minnesota. It may take until the end of October for the systems to be updated.
  • What action does my firm take? If you have a place of business in Minnesota or have more than 5 clients in Minnesota. We will help you determine the need for particular filings. Existing RIAs will need to amend the U4s for IARs conducting business in Minnesota to pay the state fees.

We will keep you posted on any changes to the timing of this requirement.

Notice from the Minnesota Department of Commerce - August 6, 2013

During the last legislative session, a bill was passed and signed into law which, among other provisions, requires the registration of Investment Advisor Representatives. This new requirement is consistent with the registration process currently in existence in 47 other states. You can review the legislation on our website at Chapter 106 S--H.F. No. 1243.

The new law has an effective date of August 1, 2013. A number of questions have arisen as a result of this legislation. Investment advisers and their representatives have requested to know whether the Department intends to enforce the testing provision prior to registration, given the short timeframe; whether the Department intends to accept professional designations in lieu of successfully passing an examination; and whether the Department would adopt a waiver or “grandfathering” policy, for Investment Advisor Representatives who have not taken the required tests in recent years and do not have a disciplinary history. The Department has received dozens of comments and has held numerous meetings with interested parties. This update is to advise you of the Department’s current position on these issues and to provide you with updated information.

The registration process will involve using the IARD system. We have now been advised by FINRA that the system will not be ready to accept new Investment Advisor Representative registrations until at least the last week of October, 2013. Therefore, the August 1st date must be extended, as a logistical matter outside the control of the Department and the control of Investment Advisor Representatives. We anticipate that once the IARD system is in place to accept registrations, a reasonable period of time to register will be allowed.

Professional Designations: Acceptance of professional designations, the CFP, CHFC, CFA, PFS and CIC, in lieu of taking a Series 65 examination or both a Series 7 and Series 66 examination is permitted in other states in place of examinations. The Department intends to follow the same approach.

Registrations in Other States: The Department’s current position is that Investment Advisor Representatives who currently are registered in other states and who have passed the required tests will be automatically registered.

New IARs: The Department’s current position is that new Investment Advisor Representatives should be required to take and pass either the Series 65 examination or both the Series 7 and Series 66 examination as a condition of registration.

The question of a deadline for passing the examination and “grandfathering” remains. The Department is currently considering providing “restricted approval” subject to taking and passing the examination(s) within a certain timeframe. We are also considering a waiver in appropriate circumstances. We have not finalized our position on these remaining issues. We would be interested in any further comments you might have in that regard. Please send any comments to the following email address


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