Last Updated on August 28, 2023

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How To Become a Fiduciary in 6 Steps

Financial advisors are professionals who advise clients on investing and saving decisions. A fiduciary advisor is a specialized type of advisor who’s committed to working on behalf of a client’s best interests. Understanding this career and the requirements could help you determine if it’s the right position for you. In this article, we show you the steps you can take to become a financial fiduciary, and we provide important career information, including job duties, average salary and career outlook.

What is a fiduciary?

A fiduciary advisor is a type of financial advisor who acts on behalf of a client. They can give financial advice or investment suggestions, and as fiduciary advisors, they commit to acting in the client’s best interest. This means they have a legal and ethical duty to act in a way that is best for their clients.

What does a fiduciary do?

A fiduciary advisor helps clients make financial decisions. This may involve investments, retirement plans or tax advice. Fiduciary advisors can specialize in a financial area, such as retirement plans, or they can give general financial advice. Their duties may vary depending on their specialty, but common responsibilities can include:

• Researching and analyzing investment opportunities for clients
• Overseeing retirement saving plans and taxes
• Advising clients on important financial decisions, including tax and insurance plans
• Meeting with clients and discussing their saving goals
• Creating financial plans or blueprints with clients
• Establishing new accounts for education, retirement or savings
• Discussing investment risk and opportunities with clients
• Managing financial accounts and investments
• Evaluating a client’s current financial health and making suggestions

How to become a fiduciary

If you are interested in becoming a fiduciary financial advisor, consider following these steps:

1. Earn a bachelor’s degree

Most fiduciary advisors earn a bachelor’s degree before beginning their career. In some cases, you may be able to begin this career with an associate degree of five years of relevant work experience. This can vary depending on your geographic location and specialty. You can check the guidelines in your state to see the specific requirements for fiduciaries in your area.

During a bachelor’s program, you can develop financial knowledge and helpful career skills. If you are in college, consider taking courses in finance, business and math. Some popular majors for fiduciary advisors to consider include:

• Business
• Economics
• Statistics
• Accounting
• Finance
• Mathematics

2. Consider a master’s program

Although optional in many roles, a master’s program could help you further your industry knowledge and financial skills. Some financial institutions may require or prefer an advanced degree. A master’s degree could help you qualify for an advanced position, earn a higher salary or land a competitive role. Financial advisors may earn a master’s in one of the following areas:

• Finance
• Finance and investment
• Financial planning
• Personal finance management
• Wealth management
• Business administration
• Business
• Economics

3. Gain professional experience

The next step in becoming a fiduciary advisor is gaining professional financial advising experience. If you are interested in becoming a certified fiduciary, most states require a certain amount of experience. For example, some states require fiduciaries to have five years of experience and a degree or ten years of experience. You can check the guidelines in your state to ensure you meet their requirements.

When looking for a job, consider which area of finance you want to work in. For example, you may focus on wealth planning, tax management or retirement plans. Consider starting your career working as a financial advisor in a specialty that interests you. This can help you develop your career skills and technical knowledge.

4. Obtain financial advisor licensing

In some locations and at some financial institutions, financial advisors need a license to offer investment advice. These certifications and licenses can vary depending on your specialty. For example, you may need to complete the Series 65, which is the Uniform Investment Adviser Law Examination. If you are selling investments, you may need to complete additional exams and obtain relevant licensing.

5. Meet fiduciary requirements

To become a fiduciary advisor, you may need to earn a fiduciary license, depending on your state. If you are interested in becoming a Certified Financial Fiduciary (CFF), you can explore the specific requirements in your state. The guidelines can vary, but typically individuals must meet the following requirements:

• Hold a bachelor’s or master’s
• Have several years of professional experience
• Pass a background check

6. Pass exams and obtain licensing

After completing the prerequisites, you can apply for your exam. To become a CFF, individuals must register with the National Association of Certified Financial Fiduciaries (NACFF). This designation means that a professional is a registered fiduciary who will act in the client’s best interests. Some locations and firms may require fiduciary advisors to hold this designation. To complete the licensing, individuals must take and pass an exam through the NACFF.

In some states, fiduciaries must hold a license with the state. Be sure to check with your local guidelines when planning your career steps to ensure you complete all requirements.

Important skills for fiduciaries

Fiduciaries use a specific set of hard and soft skills to perform their daily duties. Here are the skills you can develop to help your fiduciary career:

•  Fiduciary advisors communicate regularly with clients. They need to explain complex financial concepts in simple terms.
•  When managing a client’s funds, a fiduciary advisor should be a likable and trustworthy professional. Strong interpersonal skills, such as empathy and compassion, can help fiduciary advisors foster relationships and earn a client’s trust.
•  Fiduciary advisors oversee and manage account information. They may create risk assessments, create financial plans and document investments. They need a high attention to detail and strong organizational skills to keep information neat and accurate.
•  Fiduciary financial advisors assess risk and evaluate investment options for individual clients. They can use analytical reasoning to determine the best financial plans for each client.
•  When assessing risk or evaluating options, a fiduciary may use math skills to compare data and make predictions.
•  Fiduciary advisors should have extensive knowledge about financial options. They may specialize in a financial area or work with a client’s overall financial health.
•  Fiduciary advisors commit to serving a client’s best interest. They should develop honest, transparent advising strategies to succeed in this role.

Average salary for fiduciaries

The national average salary for financial advisors, including fiduciaries,Professionals in this career path may also earn additional compensation in the form of commission. The average commission in this career is $30,366 per year. Your salary can vary depending on your geographic location, education and experience.

how to become a fiduciary in nc

Becoming a Financial Advisor in North Carolina

Financial advisor is a term used to describe investment adviser representatives (IARs) or sole proprietors of investment adviser (IA) firms. The following is a step-by-step explanation of how to become an investment adviser representative (IAR) or establish an investment adviser (IA) firm in North Carolina registered at either the state level with the North Carolina Securities Division or at the federal level with the Securities & Exchange Commission (SEC).

Step 1. Get Your Education

Pursue the right degree program. Education is one of the most important tools an investment advisor can have. Your educational background is stored in the Investment Adviser Public Disclosure (IAPD) and can be accessed by clients at any time.

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Specific degrees and areas of study worth considering:

• BA or BS -Accounting
• BA-Consumer and Family Financial Services
• MS-Accounting, Personal Financial Planning, or Finance
• MBA-Accounting and Finance or simply Finance
• PhD-Accounting or Finance

Enroll in the right classes. Coursework applicable to a career dedicated to providing clients with expert investment advisory service would include:

• Business communications
• Accounting
• Marketing
• Ethics in business
• Business law
• Statistics
• Management
• Economics
• Behavior of groups, persons, and organizations
• Finance
• Computer information systems
• Quantitative applications applied to business
• Taxation
• Behavior of groups, persons, and organizations

Consider professional certification. You are not required to hold a professional designation; however, it does help indicate to clients a unique level of expertise. These designations often require a bachelor’s degree at minimum and/or an appropriate level of industry experience:

• Chartered Financial Analyst (CFA)
• Certified Financial Planner (CFP)
• Chartered Financial Consultant (ChFC)
• Chartered Investment Counselor (CIC)
• Personal Financial Specialist (PFS)

Step 2: Register Your Firm in North Carolina

(This step is applicable if you intend to establish an IA firm of your own. If you’ll be working with an established firm, skip to Step 3.)

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As long as your firm does not manage more than $100 million in total assets, it will be registered exclusively with the North Carolina Securities Division. If you choose to take on assets greater than $100 million, your firm will need to register at the federal level with the SEC. In both cases, investment adviser (IA) firm registration is done through the FINRA administered Investment Adviser Registration Depository (IARD).

1. Open an IARD User Account to begin the Entitlement Process. Completing the Entitle Forms specific to your new firm and assigning a Super Accountant Administrator (SAA) responsible for managing the IARD User Account will allow your firm access to FINRA’s Web-based systems. Upon submission and approval of entitlement forms, the SSA will be granted access to the Firm Gateway so as to be able to complete the remaining steps.
2. Your new investment firm is required to fund The IARD User Account with monies sufficient to paying all required fees:

• Initial IARD set up fees for state registered investment advisors are currently being waived
• $225 initial filing fee for SEC-registered advisors, which include firms with over $100 million in assets under management
• $300 initial IA firm filing fee charged by North Carolina
• Exam fees for each IAR that will be in the firm
• $75 initial state IAR filing fee charged by North Carolina for each IAR employed by the firm
• Your firm’s SSA will complete the electronic version of Form ADV. This form outlines the new IA firm’s investment philosophy and fee structures, as well as relevant background information on all IARs in the firm’s employ.
• Each investment advisor representative (IAR) in the firm is required to complete a U-4 Uniform Application for Securities Registration or Transfer. As a sole proprietor in North Carolina, you will be required to submit Form U-4 for yourself as a representative of the firm. More specific requirements can be found in Step 3.
• If the IA firm will have discretionary authority over client assets one of the following must be sent directly to the North Carolina Securities Division, PO Box 29622, Raleigh, NC 27626-0622:

• Sole proprietors must send an unaudited bank statement showing a net worth of at least $10,000
• All corporation types must send a surety bond of $35,000

Requirements to Transact Business in Other States

North Carolina IA firms can conduct business with as many as four clients in any other single state without registering or paying additional state fees. Your firm must register and pay state-specific fees in any and all other states in which it has more than four clients.

Under the De Minimis Exemption, properly registered RIAs from other states are, in kind, permitted to conduct a minimal amount of business in North Carolina, and are only required to register and pay North Carolina specific fees when their sixth North Carolina based client is added.

Step 3: Get Your Registered Investment Adviser License in North Carolina by Taking the Required Exam

North Carolina-based investment adviser firms operate in accordance with the North Carolina Investment Advisers Act and are registered at the state level if managing client less than $100 million. Firms that manage more than $100 million in client access are registered at the federal level with The Securities and Exchange Commission (SEC) regulates. The state of North Carolina and the SEC both waive exam requirements for prospective IARs that have attained one of the following designations:

• Chartered Financial Consultant (ChFC)
• Chartered Investment Counselor (CIC)
• Chartered Financial Analyst (CFA)
• Certified Financial Planner (CFP)
• Personal Financial Specialist (PFS):
• The Form U-4 Uniform Application for Securities Industry Registration or Transfer will need to be submitted through the IARD. This form functions as both the state/federal registration application and the exam application.

• Scheduled to attempt the exam(s) through one of the Prometric or Pearson Professional Center testing locations in North Carolina. You must schedule the exam(s) within 120 days of registration. Only one exam can be scheduled per day, so plan to commit two days to testing if going the multiple exam route.
• Make sure you check in with the testing center at least one hour before your scheduled exam time on the appropriate day.
• Exam scores are distributed immediately after the exam(s) is complete.

Step 4: Ongoing Renewal and Update Requirements in North Carolina

Investment Advisor Firm:

• North Carolina’s renewal fees are $300 for the firm and $75 for each IAR with the firm
• Annual updates to the ADV are required to reflect changes to fee structure and addition/termination of IARS within the firm
• License renewals must be completed by December 31st each year
• IARD administrative renewal fees are $100
• All IAR and IA firm renewals will be completed through the IARD
• Renewal fees are paid to all states where an IAR is registered

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Investment Adviser Representatives:
Maintaining a current and fully up to date Form U-4 is required of all employees of a firm. As a sole proprietor, you alone will be responsible for updating your Form U-4. Employees of a firm should contact their designated SAA and alert them with the information that should be updated in the system. Your SAA will have 30 days to complete this task. A change to any of the items listed below will require a system update:

• Disciplinary action
• Civil judgments
• Residential address
• Criminal record
• Jurisdictional changes
• Name change (marriage
• Certification
• Additional business activities
• Education
• Customer complaints