Investment Adviser FAQ and Terms to Know

Determining whether you or your business requires licensing can be difficult. Some basic questions to determine whether you or your company needs to license with the Division:

• Are you or your company effecting, or brokering, securities transactions for compensation?
• Are you or your company giving investment advice for compensation?
• Are you or your company managing people’s money for compensation?
• Are you or your company referring prospective clients to a broker-dealer, investment adviser, or investment fund for compensation?
• Are you or your company soliciting for an investment adviser, hedge fund or other pooled investment vehicle?
• Are you or your company brokering the purchase or sale of notes, debt, CDs, or private placements?
• Does your business involve securities?
• Does your business raise capital through a securities offering?

Please contact the Division to discuss whether your business would require any securities licenses. Call (801) 530-6600.

The securities industry is highly regulated as it can involve the life savings of investors. Consequently, the Investment Adviser license comes with many compliance responsibilities that may be new and intimidating to those who have not encountered them before. In addition to the Utah Uniform Securities Act and Rules, Utah also incorporates federal requirements from the Investment Advisers Act of 1940. Investment Advisers must also keep up to date on any changes to these laws and regulations that may arise. Some of these compliance responsibilities include, but are not limited to: annual amendments to the Form ADV, maintaining books and records, maintaining minimum financial requirements, bonding requirements, approving advertisements and seminars, and the supervision of IA Reps (note: specific requirements will depend on the specific nature of the investment advisory business and may vary by state).

Utah Uniform Securities Act

§61-1-2 Unlawful Acts for Investment Advisers
§61-1-3 Licensing
§61-1-4 Licensing Procedures
§61-1-5 Post-Licensing Provisions
§61-1-13 Definitions
§61-1-16 False Statement Unlawful

Utah Administrative Code (Current Rules): R164-2-1 Performance-Based Compensation; R164-2-2 Custody; R164-4-3 Licensing; R164-4-4 Minimum Financial Requirements and Reporting; R164-4-5 Bonding Requirements; R164-4-6 Notice Filing; R164-4-7 Internet; R164-4-9 Exemptions; R164-5-1 Record-Keeping; R164-5-3 Financial Reporting; R164-6-1g Dishonest or Unethical Business Practices.

Investment Advisers Act of 1940: Sec. 204A Privacy; Sec. 205 Contracts; Sec. 206 Prohibited Transactions; Sec. 215 Hedge Clauses.

SEC Rules (Rules to the 1940 Act): Rule 206(4)-2 Custody Rules; Rule 204-2 Books and Records; Rule 206(4)-1 Advertising.

Recordkeeping and Suitability

A frequent deficiency is the failure to maintain organized books and records, specifically client suitability profiles and documented annual reviews. Under the Utah Uniform Securities Act, firms must ensure that all required records, including electronic communications and trade blotters, are readily accessible. If a compliance action or client meeting is not documented, examiners essentially consider it never to have occurred.

Generic Compliance Manuals

Examiners often find that firms use "off-the-shelf" Written Supervisory Procedures (WSPs) that have not been tailored to their actual business model. Common findings include manuals that reference services the firm does not provide or omit controls for specific risks the firm actually faces. Firms are required to conduct an annual review of their WSPs to ensure they accurately reflect their daily operations and supervisory structure.

Fee Disclosures and Miscalculations

Inconsistencies between the fees stated in the Form ADV Part 2A and the fees actually deducted from client accounts are a major focus. Deficiencies arise when firms fail to provide clear, granular fee disclosures or when they charge "unreasonable" fees that exceed industry standards without justification. Examiners also look for undisclosed conflicts of interest, such as "double-dipping" or receiving third-party compensation that hasn't been fully disclosed to the client.

Failure to Update Disclosure Documents

Firms often fail to file an "Other Than Annual Amendment" promptly after material changes occur, such as changes in firm ownership, new outside business activities for representatives, or disciplinary events. Additionally, failing to deliver the annual "Summary of Material Changes" to clients within 120 days of the fiscal year-end is a recurring oversight that results in regulatory findings.

Cybersecurity and Data Protection

With the June 3, 2026, compliance deadline for amended Regulation S-P, examiners are increasingly focused on data safeguarding. Common deficiencies include the lack of a written incident response program, failure to oversee service providers with access to client data, and the use of unencrypted methods for transmitting sensitive personal information. Firms must demonstrate active identity theft prevention and data recovery protocols.

Utah Division of Securities Requirements

All Investment Adviser (IA) and Investment Adviser Representative (IAR) licenses in Utah expire annually on December 31. To maintain active status, firms must ensure their Investment Adviser Registration Depository (IARD) account is sufficiently funded by the end of the year to cover state renewal fees ($130 for the firm and $30 per representative). Licenses are renewed automatically through the IARD system upon payment; however, failure to fund the account before the year-end deadline results in the expiration of all licenses, necessitating a full re-application process. Additionally, Utah-licensed advisers must maintain their minimum net worth or bonding requirements and may be required to submit an audited balance sheet to the Division if they have custody of client funds or require significant pre-payment of fees.

Securities and Exchange Commission (SEC) Requirements

SEC-registered Investment Advisers must file an Annual Amendment to their Form ADV within 90 days of the end of their fiscal year to ensure all firm information remains accurate. This filing is mandatory even if there have been no significant changes to the business. Beyond this annual filing, the SEC requires advisers to conduct an annual review of their compliance policies and procedures to determine their adequacy and the effectiveness of their implementation. Firms must also distribute an updated Form ADV Part 2A (the "Brochure") or a summary of material changes to existing clients annually, and deliver an updated privacy notice if the firm’s data-sharing practices have changed.

FINRA (IARD System) Requirements

While FINRA does not directly regulate Investment Advisers, it operates the IARD system used by both state and federal regulators. Advisers must meet FINRA’s system-related benchmarks, including the payment of annual system processing fees ($15 per representative) and the reconciliation of the Final Renewal Statement in January. Firms are responsible for maintaining the accuracy of all Form U4 filings for their representatives throughout the year; while there is no standalone "annual" amendment for a Form U4, any material changes to a representative's background or disciplinary history must be updated promptly in the system. Failure to manage these system requirements can lead to a "fail to renew" status, causing an administrative termination of registrations.

Utah Division of Securities Requirements

All Broker-Dealer and Agent licenses in Utah expire annually on December 31. To ensure renewal, firms must fund their Central Registration Depository (CRD) account by the end of the year to cover the state’s renewal fees ($130 for the firm and $40 per agent). Licenses renew automatically through the CRD system upon successful payment; however, failure to provide adequate funds before the CRD year-end shutdown will result in the expiration of all licenses, requiring a full re-application. While the Division does not generally require the annual filing of a FOCUS report, it reserves the right to request these or other financial statements at any time to verify a firm's financial standing.

Securities and Exchange Commission (SEC) Requirements

All Broker-Dealer and Agent licenses in Utah expire annually on December 31. To ensure renewal, firms must fund their Central Registration Depository (CRD) account by the end of the year to cover the state’s renewal fees ($130 for the firm and $40 per agent). Licenses renew automatically through the CRD system upon successful payment; however, failure to provide adequate funds before the CRD year-end shutdown will result in the expiration of all licenses, requiring a full re-application. While the Division does not generally require the annual filing of a FOCUS report, it reserves the right to request these or other financial statements at any time to verify a firm's financial standing.

FINRA Requirements

FINRA member firms must complete several annual compliance benchmarks, including the filing of an Annual Audit and FOCUS reports through the FINRA Gateway within 60 days of the firm’s fiscal year-end. Under FINRA Rule 3130, the firm’s CEO must certify annually that processes are in place to establish and test supervisory procedures. Operational mandates also include conducting an annual compliance meeting for all registered personnel, performing a "Firm Element" continuing education needs analysis, and completing internal inspections of branch offices. Firms must also ensure that all Form U4 information for agents is updated promptly in the CRD system to reflect any reportable events or material changes.