California Investment Adviser Registration Requirements: Exams and Net Worth

If your advisory firm manages less than $100 million in assets and wants to serve California clients, the California investment adviser registration requirements run through the Department of Financial Protection and Innovation (DFPI). You file Form ADV electronically through the Investment Adviser Registration Depository (IARD), pay a $125 application fee, meet California’s exam and net worth standards, and separately register every person at the firm who gives advice. Registration takes effect only when the DFPI grants your certificate, not when you submit the paperwork.¹

State or Federal: Which Regulator You Answer To

The $100 million assets-under-management line decides where you register. Below $100 million in AUM, you register with California. At $100 million or more, you register with the SEC.¹

Between $100 million and $110 million you can pick either, a buffer meant to keep firms from switching regulators every time the market moves. Once you cross $110 million, SEC registration is mandatory.²

Already SEC-registered? You don’t license with California, but you can’t serve California clients until you make a notice filing with the DFPI through IARD within 30 days of doing business in the state. The notice filing costs $125, expires on December 31 each year, and must be renewed for another $125.³

Who Doesn’t Need to Register

California excludes several professionals from the definition of investment adviser when the advice is incidental to their main work. Attorneys and accountants giving investment guidance that’s incidental to legal or accounting practice don’t need to register. Neither do banks, trust companies, and savings and loan associations. Broker-dealers whose advice is incidental to brokerage activity and who collect no separate compensation for it are also outside the definition. Publishers of newspapers, news magazines, and financial publications of general and paid circulation are excluded as long as they don’t otherwise operate as advisers.⁴

“Incidental” is the word that matters. The accountant who starts charging a separate fee for portfolio management has stepped outside the exclusion and needs to register.

Out-of-state firms also get a narrow pass. If your firm has no office in California and had fewer than six California-resident clients in the preceding 12 months, you don’t have to register in the state. Certain institutional clients — other registered advisers, broker-dealers, banks, insurance companies, and government agencies — don’t count against the six.⁵

Exam and Qualification Standards

The principal of the firm and every individual who provides advice must pass a qualifying exam. California accepts the Series 65 (the Uniform Investment Adviser Law Examination) or the Series 7 paired with the Series 66 (the General Securities Representative Examination plus the Uniform Combined State Law Examination). Whichever route you take, the exam must have been passed within two years before the application date or before the individual begins acting as a representative.⁶

California waives the exam for individuals who hold any of these professional designations in good standing: Chartered Financial Analyst (CFA), Certified Financial Planner (CFP), Chartered Financial Consultant (ChFC), Chartered Investment Counselor (CIC), or Personal Financial Specialist (PFS). The designation has to be current. If it lapses, the waiver is gone and the person must pass the exam before continuing to advise clients.

Minimum Net Worth

California requires firms to maintain a financial floor that depends on how much authority they have over client assets. These are continuous requirements, not one-time checks at application.⁷

$35,000 net worth if the firm has custody of client funds or securities.
$10,000 net worth if the firm has discretionary trading authority but no custody.
Positive net worth if the firm accepts prepayments of more than $500 per client, six or more months in advance.

A firm that only provides non-discretionary advice without custody or large prepayments has no specific net worth floor, though the DFPI can still look at its finances. Firms that fall under any of the three thresholds also have to file an annual financial report, described further below.

How to File the Application

Registration is entirely electronic through IARD, which FINRA operates on behalf of state and federal regulators.⁸ The sequence matters.

Open an IARD entitlement account for the firm. Then fund the Flex-Funding Account with enough to cover the $125 filing fee and any representative fees you plan to submit at the same time. IARD pulls payment from that balance when you file.

Next, complete and submit Form ADV. For California, that means Part 1, Part 1B (the state-specific supplement), and Part 2 (your client brochure).⁹ Part 1 captures ownership, business model, affiliations, client types, and disciplinary history. Part 2 is the narrative brochure clients receive. The $125 application fee is non-refundable.¹⁰

Submission is not approval. The DFPI reviews the application and must affirmatively grant your certificate before you may advise California clients. Operating before that approval arrives violates California Corporations Code section 25230.

Registering Each Investment Adviser Representative

Every individual at the firm who gives advice, makes recommendations, manages accounts, or decides what analysis gets published has to be registered separately as an Investment Adviser Representative (IAR). This applies whether the firm is state-registered or SEC-registered with a California notice filing.¹¹

The firm files Form U4 for each representative through the Central Registration Depository (CRD).¹² As of July 2025, California charges $50 per IAR for both initial registration and annual renewal, paid through CRD.¹³

Before filing the U4, the firm has to run a reasonable investigation into the individual’s character, business reputation, and qualifications. Documentation of the qualifying exam or professional designation and of the background investigation belongs in the firm’s records.

Keeping the Registration Active

Approval is only the start. California expects ongoing filings, prompt reporting of changes, and annual financial statements where the net worth rules apply.

Annual Renewal

Firm registration expires every December 31. The $125 renewal fee goes through IARD before that date. IARD typically closes for several days at year-end to process renewals, so pay well in advance. Missing the deadline can terminate the registration.³

Form ADV Updates

Separately, file an annual updating amendment to Form ADV within 90 days after the end of your fiscal year, refreshing AUM, ownership, and anything else that has shifted.¹⁴ Don’t wait for the annual cycle when something significant changes. Form ADV instructions require “other-than-annual” amendments filed promptly for things like a new business address, a new disciplinary event, changes in ownership, and material updates to the client brochure. Changes to an IAR’s status, employment, or disciplinary record require a prompt Form U4 amendment.

Annual Financial Report

If the firm is subject to any of the minimum net worth thresholds, it must file an annual financial report with the DFPI within 90 days of fiscal year-end. The report needs a balance sheet and income statement prepared under generally accepted accounting principles.⁷

Continuing Education

California adopted NASAA’s IAR continuing education rule, effective May 2024. Every registered IAR must complete 12 credits of NASAA-approved training each calendar year by December 31: six on products and practice, six on ethics and professional responsibility.¹⁵ The obligation sits on the individual, but the firm shoulders the practical job of tracking it. An IAR who misses the credits puts their registration at risk, and the firm can be scrutinized for letting an unqualified person give advice.

Books and Records

Every licensed investment adviser in California has to keep detailed books and records of the advisory business. Required records include all client contracts, written communications sent and received relating to recommendations or transactions, and a memorandum of every purchase or sale order given on behalf of a client.¹⁶ Federal rules generally require investment advisers to keep these records for five years, the first two in an easily accessible location. California firms should treat that as the minimum and verify current DFPI guidance, since state requirements may differ.

1
Department of Financial Protection and Innovation. State Licensed Investment Adviser
2
eCFR. 17 CFR 275.203A-1 – Eligibility for SEC Registration; Switching to or From SEC Registration
3
Department of Financial Protection and Innovation. Information to Assist Persons Making a Notice Filing
4
California Legislative Information. California Corporations Code 25009
5
California Legislative Information. California Corporations Code 25202
6
Legal Information Institute. California Code of Regulations Title 10 260.236 – Qualifications of Investment Advisers and Investment Adviser Representatives
7
Department of Financial Protection and Innovation. Investment Adviser Minimum Financial and Reporting Requirements
8
Securities and Exchange Commission. Electronic Filing for Investment Advisers on IARD
9
Securities and Exchange Commission. Form ADV
10
Department of Financial Protection and Innovation. Instructions for Completing and Filing Application for Investment Adviser Certificate on Form ADV
11
California Legislative Information. California Corporations Code 25230.1
12
IARD. Form Filing – IA Representative Registration
13
Department of Financial Protection and Innovation. Post-Effective Requirements
14
Securities and Exchange Commission. Form ADV – General Instructions
15
Department of Financial Protection and Innovation. Investment Adviser Representative Continuing Education (IAR CE)
16
Legal Information Institute. California Code of Regulations Title 10 260.241.3 – Books and Records to be Maintained by Investment Advisers