Solicitor Disclosure Documents. Often times, registered investment advisors enter into an engagement with an outside firm or individual who will refer potential investment advisory clients to the RIA firm and in consideration for that referral, the RIA firm will pay the outside firm or individual for the client referral.
In this type of arrangement, under the state and federal securities rules, the outside firm or individual is considered a “Solicitor.” Meaning that the outside firm or individual is operating as a Solicitor on behalf of the RIA firm and receiving payment for referring clients.
What most RIA firms may not be aware is that when operating in that capacity, the outside firm or individual will be subject to individual state licensing requirements and the RIA firm will be required to have in place the appropriate Solicitor Disclosure documents to help document the arrangement as well as to notify the prospective investment advisory client that the arrangement exists. The payment made by the RIA firm to the Solicitor for the referral does not impact the prospective investment advisory client, in terms of fees they may pay to the RIA firm in the future. However, proper notification needs to be provided to the prospective investment advisory client.
For more information on the appropriate solicitor disclosure documents required for this arrangement and the individual state licensing requirements, contact Registered Advisor Services today for a free consultation!
