Questioning the viability of the Series 65 for accredited status

Rental Property Investor · SE Michigan · Member since 2014 · 4k+ posts · 6k+ votes

I cant speak to Series 65, but agree with your assessment that it could be a lot of work for little (or no) benefit.

Curious, why do you want to achieve accredited status? In my experience, it doesn't offer that many advantages. If you are looking to make the best returns, consider single family homes. When bought correctly, they require very little work and offer better returns than most investments that require accreditation, plus you have complete control.

In my mind the main advantage of being accredited is that you can easily deploy big chunks of capital quickly. If you had $500,000 you needed to deploy, it could take a long time to find all those houses, but you could plunk all of that down (assuming you wanted to) in one syndication.

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Michael Fenton

OP

Member since 2021 · 4 posts · 4 votes

5y

I was mostly interested in becoming accredited so that I could achieve a similar return profile (potentially) via syndicates instead of becoming a landlord for a single family home. I also liked the idea of picking a syndication vs picking out a specific property but that is purely a personal choice.

Accredited investor status also allows for many other investment options such as angel investing, farmland, etc. but I don't think those are going to be particularly popular in these forums.

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Ian IppolitoBusiness Member

Investor · Tampa, FL · Member since 2015 · 1k+ posts · 1k+ votes

5y

Originally posted by @Michael Fenton:

Background: I am individual living in Florida who does not work in the financial services industry, but has a background in finance.

There are lots of articles out there that discuss utilizing the Series 65 as a pathway to gaining accredited investor status. What doesn't seem to get many mentions is the SEC guidance that: "...a person seeking accredited investor status by passing the Series 65 exam would also need to be licensed as an investment adviser representative in her state...".

I asked the largest investment verification platform about this as well and the response seems to confirm that: "...the investor must have their license currently registered with a State to be in good standing...". I am left to believe that taking the Series 65 exam using form U10 will be of little to no value since that does not include registering as an IAR with any state.

If this is correct then I would be left with the much more costly and time consuming process of registering with my state and paying yearly fees of $250+ in order to keep my license in good standing. Even if I could manage to register in the cheapest/simplest state it still seems like quite a high hurdle to clear.

Can anyone shed some light on this? Am I missing something here or is the Series 65 an over-hyped way to gain accredited investor status for people working outside of the financial services industry?

I am not an attorney, so this is not legal advice and always consult with your own attorney before making any legal decision.

I clicked on the link you gave and noticed that it said that there are certain parties that are exempt from the registration requirements.

https://www.flofr.com/sitePage...

Exclusions from the definition of investment adviser are set forth in Section 517.021(14)(b), F.S. Any person who claims entitlement to any of the exclusions bears the burden of proving such entitlement.

That's potentially useful for your situation. So I looked up that section of the law and it says that the following type of person is excluded from being considered an investment advisor:
http://www.leg.state.fl.us/Sta...

517.021(14)(b)(7) "7. Any person who does not hold herself or himself out to the general public as an investment adviser and has no more than 15 clients within 12 consecutive months in this state;

I would think that you would not be holding yourself (i.e. advertising) to the general public that you are an investment advisor and would be keeping it to yourself. And you would have zero clients (or maybe 1 if you count yourself). So to my eyes, you would be excluded from being considered an investment advisor. And thus you do not have to register with that state.

Now as a caveat, maybe there are some other regulations that would apply that aren't listed here. Again I'm not an attorney. So I would recommend running this by an attorney who is knowledgeable in the state of Florida about this area of the law.

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Michael Fenton

OP

Member since 2021 · 4 posts · 4 votes

5y

Originally posted by @Ian Ippolito:

Originally posted by @Michael Fenton:

Background: I am individual living in Florida who does not work in the financial services industry, but has a background in finance.

There are lots of articles out there that discuss utilizing the Series 65 as a pathway to gaining accredited investor status. What doesn't seem to get many mentions is the SEC guidance that: "...a person seeking accredited investor status by passing the Series 65 exam would also need to be licensed as an investment adviser representative in her state...".

I asked the largest investment verification platform about this as well and the response seems to confirm that: "...the investor must have their license currently registered with a State to be in good standing...". I am left to believe that taking the Series 65 exam using form U10 will be of little to no value since that does not include registering as an IAR with any state.

If this is correct then I would be left with the much more costly and time consuming process of registering with my state and paying yearly fees of $250+ in order to keep my license in good standing. Even if I could manage to register in the cheapest/simplest state it still seems like quite a high hurdle to clear.

Can anyone shed some light on this? Am I missing something here or is the Series 65 an over-hyped way to gain accredited investor status for people working outside of the financial services industry?

I am not an attorney, so this is not legal advice and always consult with your own attorney before making any legal decision.

I clicked on the link you gave and noticed that it said that there are certain parties that are exempt from the registration requirements.

https://www.flofr.com/sitePage...

Exclusions from the definition of investment adviser are set forth in Section 517.021(14)(b), F.S. Any person who claims entitlement to any of the exclusions bears the burden of proving such entitlement.

That's potentially useful for your situation. So I looked up that section of the law and it says that the following type of person is excluded from being considered an investment advisor:
http://www.leg.state.fl.us/Sta...

517.021(14)(b)(7) "7. Any person who does not hold herself or himself out to the general public as an investment adviser and has no more than 15 clients within 12 consecutive months in this state;

I would think that you would not be holding yourself (i.e. advertising) to the general public that you are an investment advisor and would be keeping it to yourself. And you would have zero clients (or maybe 1 if you count yourself). So to my eyes, you would be excluded from being considered an investment advisor. And thus you do not have to register with that state.

Now as a caveat, maybe there are some other regulations that would apply that aren't listed here. Again I'm not an attorney. So I would recommend running this by an attorney who is knowledgeable in the state of Florida about this area of the law.

Interesting, thank you for pointing that out! So I think I am left with two issues:

Determining if a lawyer/investment verification platform would agree that I am a license holder in good standing if I am claiming this state registration exemption.
Finding the most efficient way to renew my license (or prevent expiration). I believe that going the Form U10 route will result in my license automatically expiring after two years.

I appreciate you digging into this, I'll see what else I can learn.

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Ian IppolitoBusiness Member

Investor · Tampa, FL · Member since 2015 · 1k+ posts · 1k+ votes

5y

Originally posted by @Michael Fenton:

Originally posted by @Ian Ippolito:

Originally posted by @Michael Fenton:

Background: I am individual living in Florida who does not work in the financial services industry, but has a background in finance.

There are lots of articles out there that discuss utilizing the Series 65 as a pathway to gaining accredited investor status. What doesn't seem to get many mentions is the SEC guidance that: "...a person seeking accredited investor status by passing the Series 65 exam would also need to be licensed as an investment adviser representative in her state...".

I asked the largest investment verification platform about this as well and the response seems to confirm that: "...the investor must have their license currently registered with a State to be in good standing...". I am left to believe that taking the Series 65 exam using form U10 will be of little to no value since that does not include registering as an IAR with any state.

If this is correct then I would be left with the much more costly and time consuming process of registering with my state and paying yearly fees of $250+ in order to keep my license in good standing. Even if I could manage to register in the cheapest/simplest state it still seems like quite a high hurdle to clear.

Can anyone shed some light on this? Am I missing something here or is the Series 65 an over-hyped way to gain accredited investor status for people working outside of the financial services industry?

I am not an attorney, so this is not legal advice and always consult with your own attorney before making any legal decision.

I clicked on the link you gave and noticed that it said that there are certain parties that are exempt from the registration requirements.

https://www.flofr.com/sitePage...

Exclusions from the definition of investment adviser are set forth in Section 517.021(14)(b), F.S. Any person who claims entitlement to any of the exclusions bears the burden of proving such entitlement.

That's potentially useful for your situation. So I looked up that section of the law and it says that the following type of person is excluded from being considered an investment advisor:
http://www.leg.state.fl.us/Sta...

517.021(14)(b)(7) "7. Any person who does not hold herself or himself out to the general public as an investment adviser and has no more than 15 clients within 12 consecutive months in this state;

I would think that you would not be holding yourself (i.e. advertising) to the general public that you are an investment advisor and would be keeping it to yourself. And you would have zero clients (or maybe 1 if you count yourself). So to my eyes, you would be excluded from being considered an investment advisor. And thus you do not have to register with that state.

Now as a caveat, maybe there are some other regulations that would apply that aren't listed here. Again I'm not an attorney. So I would recommend running this by an attorney who is knowledgeable in the state of Florida about this area of the law.

Interesting, thank you for pointing that out! So I think I am left with two issues:

Determining if a lawyer/investment verification platform would agree that I am a license holder in good standing if I am claiming this state registration exemption.
Finding the most efficient way to renew my license (or prevent expiration). I believe that going the Form U10 route will result in my license automatically expiring after two years.

I appreciate you digging into this, I'll see what else I can learn.

You're welcome.

I'm not sure I would necessarily trust a verification platform for legal advice on this (since it probably falls outside of what they typically do). I would recommend consulting with a good attorney who is knowledgeable in this area instead.

And they can also tell you the best way to renew your license as well. I'm curious to hear what you find out, so please do let me know what happens. Good luck!

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Bryan Hancock

Investor · Round Rock, TX · Member since 2010 · 8k+ posts · 4k+ votes

5y

I can't speak to the legalities either, but functionally if an accreditation service says you have to meet X to gain their accreditation that is likely what you're going to have to do for any sponsors who would use their service. The sponsors are hiring the accreditation service to go through this process with investor candidates and thus you'll be using whatever their risk tolerance level is to gain the accreditation status you need.

Jor Law is the founder of VerifyInvestor and is also a securities attorney. I'd look around for commentary from him or consider emailing him. He's a nice guy and is generally very responsive. He's also very non-lawyer in the sense that he thinks like an entrepreneur, which is quite rare in my experience.

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Questioning the viability of the Series 65 for accredited status

Questioning the viability of the Series 65 for accredited status

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