Business Models: Solicitor/Referral 


    Solicitor/Referral  
    A solicitor “finds” and refers clients to an investment adviser for a fee. A solicitor generally is not required to register as an investment adviser with the SEC if his activities are limited to referring clients to the registered investment adviser. However, many states require registration of the solicitor as an investment adviser or investment adviser representative. A solicitor is not required to register as a broker-dealer or a registered representative if his activities do not involve discussing or recommending the purchase of securities products.

    Registered investment advisers must make certain disclosures regarding solicitation or referral arrangements in Part II of the Form ADV filed by the adviser and delivered to clients. In addition, the solicitor must provide clients with a separate written disclosure document containing information concerning the solicitation or referral relationship, including the compensation arrangement and other information. 

    Under this model the CPA firm or individual CPA refers the client to a third-party financial services professional and receives a fee. Neither investment advice nor financial products are provided or sold to clients by the CPA firm or the individual CPA.

     
    Structure and Implementation
    Registration and Compliance


    Referral without Fees
      
    If a solicitor refers clients to an investment adviser but does not charge or receive a fee or other cash or non-cash compensation, the referral arrangement itself will not require the solicitor to register as an investment adviser, investment adviser representative, broker-dealer or broker-dealer representative, nor must the referral arrangement be disclosed to clients.




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