What Is an Investment Adviser Representative (IAR)?

by Julie S. Mendel, SILA-A, CDEi | Mar 11, 2021
What is an investment adviser representative (IAR)

In the financial services sector, there are several terms, titles, and acronyms, and it can be hard to keep track of all of them. In this article, we’re going to look at some frequently-asked questions about investment adviser representatives (IARs).

What Is an Investment Adviser Representative (IAR)?

When defining an investment adviser representative (IAR), most states follow a definition like that given in the Uniform Securities Act. Generally, an investment adviser representative is a person who is paid to do one or more of the following:

  1. Make recommendations or otherwise render advice regarding securities.
  2. Manage accounts or portfolios of clients.
  3. Determine which securities recommendations or advice they should give.
  4. Sell investment advisory services or solicit, offer, or negotiate for the sale of investment advisory services.
  5. Supervise employees who perform any other service in this list.

IARs are usually employed by an investment advisory company. Although the terms “investment adviser” and “financial advisor” sound similar, they are not interchangeable. As discussed above, investment adviser is a legal term for someone who is paid for providing clients with securities advice. Financial advisor is a generic term which typically refers to a registered representative (i.e., a broker).

What Do Investment Adviser Representatives (IARs) Do?

According to the North American Securities Administrators Association (NASAA), three essential elements characterize the responsibilities of investment advisers:

  • Provides advice or analysis about securities.
  • Receives compensation for the advice they provide.
  • Engages in regular business of providing advice about securities.

In addition to providing individually tailored investment advice, some investment adviser representatives manage investment portfolios. Others may offer financial planning services or, if they are properly licensed, brokerage services (such as buying or selling stock or bonds)—or some combination of all these services.

Who Regulates Investment Adviser Representatives (IARs)?

Investment adviser representatives who manage client assets worth $110 million or more are regulated by the Securities and Exchange Commission (SEC), whereas IARs who manage less than $110 million are regulated by state securities regulators. Most states require investment adviser representatives to register or become licensed (some states use the term “register” and others use the term “license”). Investment adviser representatives (IARs) are limited in the advice they can offer by which licenses they hold.

Spelling: Investment Adviser or Investment Advisor?

Normally the spellings “advisor” and “adviser” are interchangeable in English, both with the same meaning: someone who gives advice. However, when it comes to investment advisers, we purposely spell adviser with an “e”. This is the standard spelling used for this type of investment professional due to it being the spelling used in relevant laws (see specifically the Investment Advisers Act of 1940).

Investment Adviser Representative (IAR) Continuing Education from WebCE

NASAA has officially adopted a model rule to set the parameters by which NASAA members can implement continuing education (CE) programs for investment adviser representatives (IARs) in their jurisdictions. Unlike other financial service professions, IARs have previously not been subject to a continuing education requirement to maintain their registrations with state regulators. The model rule will help NASAA members close this gap by requiring IARs to take 12 hours of continuing education annually.

WebCE is primed to help fill that gap by offering IARs a convenient option to complete their continuing education online. WebCE’s expertise in Firm Element, securities, insurance, and professional designations along with years of experience with course submissions and reporting to regulators has positioned WebCE to begin offering Investment Adviser Representative CE as soon as courses can be approved.

WebCE’s Investment Adviser Representative CE course catalog is expected to be available in early 2021.

WebCE Course Catalog