Yes, a CPA can be a financial advisor, but the CPA license by itself only covers investment talk that comes up as a byproduct of tax or audit work. Once advice on securities becomes the service a client is paying for, federal law treats the CPA as an investment adviser and requires registration, usually an exam, and a fiduciary standard of care. The licensing path is shorter than many accountants expect, because CPAs who hold the right additional credential can skip the main qualifying exam.
What a CPA License Alone Lets You Do
The Investment Advisers Act of 1940 excludes any “lawyer, accountant, engineer, or teacher whose performance of such services is solely incidental to the practice of his profession” from the definition of investment adviser.1Office of the Law Revision Counsel. 15 U.S. Code 80b-2 – Definitions A CPA can discuss how an investment decision affects a client’s tax liability, recommend timing a capital gain, or flag the tax consequences of a retirement withdrawal without registering. The advice has to stay secondary to the accounting engagement rather than the reason the client hired you.
The exemption falls away as soon as the CPA holds themselves out as a financial planner, advertises financial planning services, or charges a fee calculated differently from the standard accounting rate. Recommending specific securities, building model portfolios, or billing a percentage of assets under management all push the work outside the safe harbor.
When You Have to Register as an Investment Adviser
Once advice on securities moves beyond what’s incidental to accounting work, the Act makes it unlawful to use the mail or any means of interstate commerce in connection with an advisory business without registering.2Office of the Law Revision Counsel. 15 USC 80b-3 – Registration of Investment Advisers The trigger is compensation: if you accept pay for advising others on the value of securities or whether to invest in them, you are an investment adviser under the statute.
Skipping registration is not a paperwork offense. A willful violation of the Act carries a criminal fine of up to $10,000, imprisonment for up to five years, or both.3Office of the Law Revision Counsel. 15 U.S. Code 80b-17 – Penalties The SEC can also pursue civil injunctions and disgorgement of fees. A CPA license offers no protection once the practitioner has crossed into compensated investment advice.
State vs. SEC Registration
Where to register depends on how much money is being managed. Advisers with $100 million or more in regulatory assets under management register with the SEC; those below that threshold generally register with their state securities regulator.4SEC.gov. Form ADV Instructions for Part 1A – Appendix B An adviser whose assets reach $110 million must switch to SEC registration within 90 days. Most CPAs starting an advisory practice register at the state level first.
Registration at either level runs through Form ADV. Part 1 covers the firm’s structure, ownership, disciplinary history, and business practices. Part 2A is the client-facing brochure that describes services, fees, conflicts of interest, and the adviser’s background, and it must be delivered to every client at or before the time they sign an advisory agreement.5SEC.gov. Form ADV Part 2 – General Instructions A sole practitioner typically registers their firm as a Registered Investment Adviser (RIA); someone joining an existing RIA registers individually as an Investment Adviser Representative. Most states charge between $50 and $200 annually for the representative registration.
The Series 65, and How CPAs Can Skip It
State regulators require investment adviser representatives to pass the Series 65, the Uniform Investment Adviser Law Examination, which covers federal securities law, ethical practices, investment vehicle characteristics, and economic analysis.6North American Securities Administrators Association. Series 65 Exam Content Outline Someone who already holds a Series 7 can take the Series 66 instead, which bundles the Series 63 and Series 65 content.7NORTH AMERICAN SECURITIES ADMINISTRATORS ASSOCIATION. Exam FAQs
NASAA reviewed which professional designations demonstrate enough investment and regulatory knowledge to substitute for the Series 65 and concluded that the CPA license alone does not qualify. The AICPA’s Personal Financial Specialist (PFS) designation does, and so do the Certified Financial Planner (CFP) and Chartered Financial Analyst (CFA) credentials. Most states let holders of any of the three register without sitting for the Series 65.7NORTH AMERICAN SECURITIES ADMINISTRATORS ASSOCIATION. Exam FAQs For a CPA who already plans to earn the PFS, this waiver saves meaningful time and cost.
PFS and CFP: The Credentials CPAs Typically Add
The PFS is granted by the AICPA and is open only to licensed CPAs in good standing, which makes it the natural step for an accountant moving into advisory work. Candidates must accumulate at least 3,000 hours of personal financial planning experience within the preceding five years, up to 1,000 of which can come from tax compliance work.8AICPA & CIMA. Personal Financial Specialist (PFS) Credential After earning the credential, holders complete 20 hours of financial planning CPE every 12 months to maintain it. Beyond unlocking the Series 65 waiver, the PFS signals verified expertise in estate planning, retirement strategies, and investment analysis.
The CFP carries broader recognition outside the accounting profession. The CFP Board offers an accelerated path that lets CPAs bypass most of the standard coursework based on the knowledge their license already demonstrates. Candidates on that path still complete a capstone course, pass the CFP exam, meet the experience requirement, and hold at least a bachelor’s degree.9CFP Board. Accelerated Path Many CPAs building a client-facing advisory practice earn both.
Selling Securities or Insurance Is a Separate Question
Investment adviser registration covers giving advice about securities for a fee. Selling securities on commission, including executing trades or placing clients in load mutual funds for transaction-based pay, is broker-dealer activity and requires separate FINRA registration with its own exams, the SIE and Series 7. A fee-only practice charging flat fees or a percentage of assets under management generally avoids this layer.
Selling insurance products such as annuities and life insurance requires a state insurance license from the CPA’s home state insurance department. Variable annuities, which carry a securities component, require both the insurance license and securities registration. Insurance licensees also face ongoing continuing education in most states.
The Fiduciary Standard and the AICPA Code
A CPA who registers as an investment adviser takes on a fiduciary duty under federal law and must put the client’s interests ahead of their own in every recommendation. In practice that means disclosing material conflicts of interest with enough specificity for the client to make an informed decision about whether to accept the conflicted advice.5SEC.gov. Form ADV Part 2 – General Instructions The Form ADV brochure is the main written vehicle for those disclosures, but the duty governs the substance of each recommendation, not just the paperwork.
The AICPA’s Code of Professional Conduct sits on top of the federal standard. Members must act with integrity and objectivity, fully disclose conflicts and obtain client consent, maintain confidentiality, and disclose any commissions or referral fees.10AICPA & CIMA. Professional Responsibilities Commissions and referral fees are prohibited outright when the CPA also provides audit or review services for the same client. Where commissions are allowed, they must be disclosed in writing. A single failure to disclose can draw enforcement from the state board of accountancy, discipline from the AICPA, and a civil claim from the client, all for the same conduct.
Ongoing Filings and the Custody Rule
Registration isn’t one and done. Every registered adviser files an annual updating amendment to Form ADV within 90 days of fiscal year end.11SEC.gov. Form ADV – General Instructions Updated brochures reflecting material changes go to existing clients within 120 days of fiscal year end.
Advisers who serve retail investors also file and deliver Form CRS, a short plain-language relationship summary. Initial delivery happens at or before the client signs the advisory contract, and material changes have to reach existing clients within 60 days.12U.S. Securities and Exchange Commission. Frequently Asked Questions on Form CRS
Handling client funds triggers more. Under the SEC’s custody rule, an adviser who holds client funds or securities, or has authority to withdraw them from a custodian, must arrange for an independent public accountant to conduct a surprise verification of those assets at least once per calendar year, with the timing varied from year to year and no advance notice.13eCFR. 17 CFR 275.206(4)-2 – Custody of Funds or Securities of Clients by Investment Advisers There is one practical escape: if the only form of custody is authority to deduct advisory fees from client accounts, the surprise audit doesn’t apply. For most CPAs starting out, fee deduction is the only custody trigger they’ll have, which keeps this requirement off the table.