How to Start a Financial Consulting Business: Series 65, Form ADV

Starting a financial consulting business means registering as an investment adviser, and that is a regulated process with a defined sequence: pass the Series 65 licensing exam, form a legal entity, register with either your state securities regulator or the SEC through Form ADV, and build out the compliance, insurance, and recordkeeping systems the Investment Advisers Act of 1940 requires before you take on a single client. The Act imposes a fiduciary duty that puts every client’s interests ahead of your own, and regulators enforce that duty seriously. From first exam sitting to approved registration, expect several months.

Pass the Series 65

Before you can legally charge fees for investment advice, you need to pass the Series 65, formally the Uniform Investment Adviser Law Examination. NASAA designed it and FINRA administers it. The test has 130 scored questions, you get 180 minutes, and you need at least 92 correct answers to pass. The fee is $187.¹

Content covers economic factors and business information, investment vehicle characteristics, client investment recommendations, and securities regulations. You do not need a sponsoring firm to sit for it, which is why it is the standard entry point for people opening their own firm rather than joining a broker-dealer.

Certain professional designations can waive the exam. Holders of the CFP and CFA credentials commonly qualify, and some states also recognize the Chartered Investment Counselor (CIC) and Personal Financial Specialist (PFS) designations. Waiver rules vary by state, so confirm with your state securities regulator before relying on a credential alone.²

Once licensed, if your state has adopted NASAA’s model rule, you must complete 12 CE credits annually: six in Ethics and Professional Responsibility and six in Products and Practice.³

Form Your Legal Entity and Get an EIN

Form a legal entity before you file anything else. Most advisory firms organize as an LLC or a corporation; sole proprietorships are technically permitted. Form the entity through your state’s secretary of state office first, because your EIN application depends on it and your registration forms require the entity’s exact legal name.

Apply for the EIN through the IRS online tool. The application has to be completed in a single session (it times out after 15 minutes of inactivity), and you need the Social Security number or ITIN of the person the IRS treats as the “responsible party.”⁴ You will use the EIN for tax filings, business bank accounts, and your advisory registration.

Your firm name is also regulated. Federal law restricts the term “investment counsel” as a business descriptor unless your principal business is investment advice and a substantial part of it involves supervisory services. Many states add further naming restrictions, particularly around terms that imply specialized credentials for advising seniors. Avoid any name that could mislead the public about what you do or imply guarantees you cannot make.

Decide Whether You Register With Your State or the SEC

Your assets under management determine who regulates you. Advisers managing $100 million or more generally register with the SEC. Advisers below that threshold generally register with the securities regulator in their home state. One narrow exception: if your home state does not require registration or does not conduct examinations, you may register with the SEC at the $25 million threshold.⁵

For almost everyone starting from scratch, state registration is the reality. You will not hit $100 million on day one. The registration forms are largely the same either way, but fee schedules, net worth requirements, and examination practices differ significantly from state to state.

Prepare Form ADV and Supporting Documents

Form ADV is the core registration document for every investment adviser in the United States, state-registered or SEC-registered. It has several parts, and this is where most of the real work happens.

Part 1A

Part 1A is factual: legal name, principal office address, ownership structure, employees who give investment advice, and identifying information for anyone owning more than 10% of the firm or holding a key leadership position. It also asks about billing practices, assets under management, and any disciplinary history of the firm or its principals.⁶

Part 2A, the Firm Brochure

Part 2A is the document prospective clients actually read. Plain English, and it must describe your fee schedule, investment strategies, potential conflicts of interest, and disciplinary history. The fee schedule here must match your actual billing practices exactly. Regulators treat discrepancies between what you disclose and what you charge as a serious violation.

Part 2B, the Brochure Supplement

Part 2B is a professional biography for each individual at the firm who gives investment advice: education, business background, and any disciplinary events, so clients know who is managing their money.

Form U4

Every individual who will serve as an Investment Adviser Representative files a Form U4. It captures professional history, residential history, and detailed disclosure questions covering criminal history, regulatory actions, and financial events like bankruptcies. Fingerprinting requirements vary by jurisdiction; check with your state regulator.

Client Advisory Agreements

Federal law does not technically require written advisory agreements for SEC-registered advisers. In practice, nearly every state requires written agreements for state-registered advisers, and operating without one is reckless from both a compliance and liability standpoint regardless. Your agreement should spell out services, fees, termination rights, and any discretionary authority you hold over client accounts.

File Through IARD, Pay Fees, Wait for Approval

All Form ADV and Form U4 filings go through the Investment Adviser Registration Depository (IARD). You create an account, upload the completed forms and brochures, and pay the applicable fees.

SEC-registered advisers pay an initial registration fee based on AUM:

Less than $25 million: $40
$25 million to $100 million: $150
$100 million or more: $225

Annual updating amendments follow the same schedule.⁷ For state-registered firms, the IARD system fee is waived through 2026, though states charge their own registration fees on top. Individual representative IARD system fees are $15 per person.⁸ State registration fees vary widely.

Once you submit a complete application to the SEC, the agency has 45 days to grant your registration or begin proceedings to deny it. The clock starts when the application is complete and in proper form.⁶ State timelines vary and are often shorter, but expect back-and-forth to clarify disclosures either way. You cannot provide advisory services until your registration is approved.

Meet Net Worth and Insurance Requirements

Most states impose minimum net worth requirements, and the amount depends on how much control you have over client money. Advisers who exercise discretion over client accounts (meaning you can trade without client approval each time) generally need at least $10,000 in net worth. Advisers who take custody of client funds or securities typically need $35,000. When net worth falls below the minimum, you can often post a surety bond covering the shortfall, rounded up to the nearest $5,000.

Errors and Omissions Insurance

Some states require Errors and Omissions insurance, also called professional liability insurance. Even where it is not legally required, operating without it is a gamble most advisers cannot afford. E&O covers legal defense costs, settlements, and judgments arising from claims that your advice caused a client financial harm. Average premiums for financial advisers run roughly $3,400 per year, though actual cost depends on firm size, services, and claims history.

ERISA Fidelity Bonds

If your firm manages retirement plan assets, ERISA imposes a separate requirement. Anyone who handles plan funds must be covered by a fidelity bond equal to at least 10% of the plan assets they handled in the prior year, with a minimum of $1,000 and a maximum the Department of Labor can require of $500,000 (or $1,000,000 for plans holding employer securities). The bond must come from a surety on the Treasury Department’s approved list and cannot include a deductible.⁹

Build Your Compliance Program Before Day One

Registration approval is not the finish line. The day your firm becomes active, a functioning compliance program needs to be in place. This is where new advisers underestimate the workload.

Chief Compliance Officer

Every SEC-registered adviser must designate a chief compliance officer. The rule requires this person to be a “supervised person,” meaning someone inside the firm, not an outsourced contractor filling the role on paper. The CCO administers the firm’s compliance policies and is the person regulators expect to answer for the firm’s adherence to the securities laws.¹⁰ At a solo firm, the CCO is you.

Written Compliance Policies

SEC Rule 206(4)-7 requires you to adopt and implement written policies and procedures designed to prevent violations of the Advisers Act. The SEC deliberately avoids a one-size-fits-all checklist, but it expects your manual to address the areas relevant to your business, including at minimum: portfolio management; trading practices and best execution; personal trading by the adviser and supervised persons; the accuracy of disclosures in account statements, advertisements, and regulatory filings; safeguarding of client assets; recordkeeping; valuation of client holdings and fee calculation; privacy; and business continuity. Everything does not have to live in one document, but every area needs written coverage.¹¹

Books and Records

Federal rules specify exactly which records you must keep. At the foundation, you need journals of all cash receipts and disbursements and general ledgers reflecting asset, liability, reserve, capital, income, and expense accounts. Beyond the accounting basics, the rule covers written communications, client contracts, and records supporting any performance advertising. All books and records must be preserved for at least five years from the end of the fiscal year in which the last entry was made, with the first two years kept in an appropriate office of the adviser.¹² Failing to maintain them can bring SEC enforcement ranging from censure to monetary penalties to revocation; fines in recent cases have reached into the millions.

If You Take Custody

Most startup advisers do not hold client funds or securities on day one, but if your firm does hold them or has authority to withdraw them from a custodian, you are deemed to have “custody” under SEC rules. That triggers extra obligations, including sending clients quarterly account statements yourself when the qualified custodian does not and submitting to an annual surprise examination by an independent public accountant.¹³

Protect Client Data Under Regulation S-P

Regulation S-P requires investment advisers to adopt written policies and procedures for safeguarding customer information. The SEC amended these rules significantly, and smaller advisers face a compliance deadline of June 3, 2026.¹⁴ The amended rules require a written incident response program designed to detect, respond to, and recover from unauthorized access to customer information.

The program must include procedures to assess the nature and scope of any incident, identify which systems and data types were compromised, and contain the breach. If you use service providers that maintain customer information on your behalf, you need written policies requiring them to notify you of unauthorized access within 72 hours. You must also keep written records documenting compliance, including copies of your policies, incident reports, and notifications sent to affected individuals.

Separately, you need written procedures for the secure disposal of consumer information and customer records. The standard is reasonable measures to protect against unauthorized access in connection with disposal.¹⁵ For a startup, think about data lifecycle from day one.

Follow the Marketing Rule When You Advertise

The SEC’s Marketing Rule governs how you present your firm to prospective clients. It is more permissive than the old advertising rules but still carries real restrictions. Advisers can now use client testimonials and third-party endorsements, but only under specific conditions.

You cannot compensate anyone for a testimonial or endorsement if that person was subject to a disqualifying event (certain criminal convictions, regulatory bars, or final orders) within the prior 10 years.¹⁶ Compensated endorsers must disclose the compensation arrangement to the audience.

Performance advertising is where new firms trip up. If you show gross performance, you must also show net performance over the same time period, using the same methodology and return type, in a format designed to facilitate comparison with the gross numbers, not buried in a footnote three clicks away. If you pull out the performance of a single investment or group of investments from a larger portfolio, you must present the total portfolio’s gross and net performance alongside it with at least equal prominence.¹⁶

Ongoing Obligations

Running a compliant firm is not a one-time setup. Several obligations recur for the life of the business.

Annual Form ADV Amendment

File an updating amendment to Form ADV within 90 days of your fiscal year-end, capturing changes in AUM, personnel, fee structures, or disciplinary events. Material changes to your brochure also trigger a duty to deliver the updated version, or a summary of changes, to existing clients.⁶

Business Continuity Planning

Your compliance manual should include a written business continuity and succession plan. NASAA guidance recommends it address backup of books and records, alternate communication methods with clients and regulators, possible office relocation, how clients will be informed if the plan is activated, and how clients will access their funds or securities during a disruption. If the plan involves temporarily or permanently assigning client accounts to another adviser, you need advance written consent from those clients.¹⁷

Successor Registration

If your firm undergoes a structural change, such as converting from an LLC to a corporation or being acquired, the successor entity is treated as registered under the Advisers Act so long as it files a new registration application within 30 days of the succession. The SEC retains authority to deny, revoke, or suspend the successor’s registration through its normal proceedings.⁵ Miss that 30-day window and the new entity is operating without valid registration, which is the kind of problem that ends businesses.

1
FINRA. Series 65 – Uniform Investment Adviser Law Exam
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FINRA. Qualification Exams
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North American Securities Administrators Association. IAR CE Requirements Overview
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Internal Revenue Service. Get an Employer Identification Number
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Office of the Law Revision Counsel. 15 US Code 80b-3 – Registration of Investment Advisers
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U.S. Securities and Exchange Commission. Frequently Asked Questions on Form ADV and IARD
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U.S. Securities and Exchange Commission. Electronic Filing for Investment Advisers on IARD – IARD Filing Fees
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North American Securities Administrators Association. NASAA Announces 2026 Fee Schedule for Investment Adviser Registration Depository System
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U.S. Department of Labor. Protect Your Employee Benefit Plan With an ERISA Fidelity Bond
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eCFR. 17 CFR 275.206(4)-7 – Compliance Procedures and Practices
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U.S. Securities and Exchange Commission. Compliance Programs of Investment Companies and Investment Advisers
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eCFR. 17 CFR 275.204-2 – Books and Records to Be Maintained by Investment Advisers
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U.S. Securities and Exchange Commission. Custody of Funds or Securities of Clients by Investment Advisers
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FINRA. SEC Regulation S-P Compliance Date Approaching for Some Entities
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eCFR. 17 CFR 248.30 – Procedures to Safeguard Customer Information, Disposal of Customer Information and Consumer Information
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U.S. Securities and Exchange Commission. Marketing Compliance – Frequently Asked Questions
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North American Securities Administrators Association. Compliance Matters – Business Continuity