The 60-second version
An RIA is a firm that gets paid to give investment advice. Ours will be small, so Michigan regulates it, not the SEC. Here is the whole thing in five lines.
- Guerrero Financial LLC registers with Michigan's securities regulator, LARA, as an investment adviser. That is the RIA.
- Rick registers under it as an investment adviser representative, the person who actually gives the advice.
- For commission products like variable annuities, Rick also joins an outside broker-dealer, which supervises that side. This is called a hybrid.
- Client money never sits with us. A custodian, a large brokerage firm, holds the accounts and sends clients their statements.
- You make sure we follow the rules: written policies, honest disclosures, records kept, and deadlines met. That is the compliance officer's job.
Who's who
Five parties, each with a different job and a different regulator. Think of it like a bank: the branch gives advice, the vault holds the money, and examiners check both.
Guerrero Financial LLC, the RIA
Regulated by LARA, MichiganGives advice for a fee and acts as a fiduciary on advisory accounts. Files Form ADV, the registration that tells the public who we are, what we charge, and our conflicts.
The broker-dealer
Regulated by FINRAAn outside firm Rick joins for commission products. It supervises that business, reviews our marketing, and files Rick's broker registration.
The custodian
A large brokerage firmHolds client accounts in the client's name, executes trades, and sends statements. Often the broker-dealer's clearing firm, sometimes Schwab.
Insurance carriers
Licensing by DIFS, MichiganLife insurance and annuities. Rick holds life and variable licenses; carriers appoint him to sell their products.
The client
Protected by all of the aboveSigns our advisory agreement, receives our brochure first, and can look us up on public databases at any time.
Your role as compliance officer
You don't give advice, so you don't need Rick's exams. You run the rulebook.
In practice that means four things: you write and keep our written procedures current, you review anything we publish before it goes out, you keep the records regulators can ask for, and you own the calendar of filings and renewals. Your banking and CPA background is exactly the right fit; most of it is controls, documentation, and deadlines.
First thing to check: your bank's policy on outside business activities. Ask HR or compliance whether you can serve as the compliance officer of a family firm, and get the answer in writing.
1. Do now
These have deadlines. Rick left his last firm in December 2025, and his exams expire two years after that unless he takes action.
Keep the Series 7 alive
RickElect FINRA's Maintaining Qualifications Program before December 2027.
Why: it keeps the exam valid for up to five years with yearly continuing education, so Rick doesn't have to retake it.
Keep the Series 66 alive
RickEnroll in NASAA's Exam Validity Extension Program for both parts of the 66, $35 a year each.
Why: the 66 is what lets Rick give advice. Confirm with LARA that Michigan honors the extension.
Read Rick's public record together
BothLook up Rick on BrokerCheck (brokercheck.finra.org) and read every entry.
Why: what's already public shapes the disclosure pages you'll file. Anything to explain gets written up once, carefully.
2. Set up the business
Before any regulatory filing, the firm needs to exist, and its partners need to be picked. The broker-dealer comes first, because it affects everything after.
Form Guerrero Financial LLC
BothFile with LARA's Corporations Division, sign an operating agreement, get an EIN, open a business bank account.
Why: the RIA registers as this company. Decide ownership now; it goes on Form ADV.
Choose the broker-dealer
RickPick an independent broker-dealer that allows reps to own an outside RIA. Get its written approval of Guerrero Financial, Dalmatian Real Estate and Dalmatian Consulting.
Why: it supervises the commission side, approves our website, and its name goes in our disclosures. Vanessa reviews its compliance terms before Rick signs.
Choose the custodian
RickUsually the broker-dealer's clearing firm; Schwab is another option. Confirm it will take a new firm with no assets yet.
Why: using the same firm for both sides gives clients one login and one statement.
Get your bank's OK
VanessaWritten approval from your employer to serve as Guerrero Financial's compliance officer.
Why: you'll be named on Form ADV, which is public.
Domain, email and archiving
RickBuy guerrerofinancial.com, set up business email, and sign up for an archiving tool that saves every email, web page and social post.
Why: regulators can ask for any client communication. Personal email and texts can't be used for business.
3. The paperwork
This is your chapter. Michigan wants these documents with the application. Most firms start from a template and fit it to themselves; the goal is that every page is true of how we actually work.
Form ADV Part 1
VanessaThe online registration form: ownership, office address, services, how we're paid, and disclosure questions.
Why: it becomes our public record on the SEC's adviser search site. Any yes answer gets a short written explanation page.
Form ADV Part 2A, the brochure
VanessaA plain-language document for clients: services, fees, every conflict of interest, and how we handle them.
Why: clients must get it before or when they sign. Our conflicts include commissions, the broker-dealer, and our real estate and consulting companies.
Form ADV Part 2B, Rick's supplement
BothA short page about Rick: education, work history, other businesses, and how he's supervised.
Why: clients get one for each person who advises them. Rick fills in the facts; you review it.
The advisory agreement
VanessaThe contract each client signs: services, fee, how it's billed, and how either side can end it.
Why: Michigan reviews it with the application, and any later change has to be mailed to LARA within 30 days.
Written procedures
VanessaThe rulebook: supervision, a business continuity and succession plan, code of ethics with personal trading, privacy, cybersecurity, advertising review, and custody if fees come out of client accounts.
Why: Michigan requires the procedures and the continuity plan with the application. Examiners test whether we follow them.
Balance sheet and net worth
VanessaA balance sheet on the accrual basis (GAAP), no more than 45 days old, signed by a member.
Why: if we have discretion over client accounts, Michigan requires $10,000 minimum net worth. Deducting fees from accounts alone doesn't trigger a requirement. A shortfall is covered with a surety bond.
Errors and omissions insurance
RickProfessional liability coverage for advice.
Why: not required by Michigan, but recommended, and the broker-dealer may require it.
4. File with Michigan
Part of the application goes online through FINRA's adviser filing system, called IARD, and part goes to LARA on paper.
Open the firm's filing account
VanessaRequest IARD access for Guerrero Financial and fund the account that pays filing fees.
Why: every filing and renewal runs through it. As compliance officer you hold the main login.
File Form ADV online
VanessaSubmit Parts 1, 2A and 2B and pay Michigan's $200 firm fee.
Why: this starts LARA's review.
Mail the paper items
VanessaAdvisory agreement, balance sheet, written procedures with the continuity plan, and proof of Rick's exams, to LARA's Securities and Audit Division.
Why: LARA reviews these with the online filing. Send with signed delivery confirmation.
Register Rick as the adviser
BothFile Rick's Form U4 through the firm's account, with any disclosure pages. Rick answers; you file.
Why: the firm and the person each need to be registered. There's a separate individual fee; LARA can confirm the amount.
Answer LARA's questions
VanessaLARA emails a list of anything missing or unclear. Answer it completely and quickly.
Why: this is normal. Fast, complete answers are the easiest way to speed approval.
Broker-dealer and insurance side
RickThe broker-dealer files Rick's broker registration; insurance carriers appoint him for their products.
Why: variable annuities need both the insurance license and the broker-dealer registration.
5. Before the first client
Nothing is advertised and no client signs until Michigan approves both the firm and Rick.
Confirm approval
VanessaLARA approves the firm, and Rick's registration shows as effective.
Why: advising or advertising before this is doing business unregistered.
Approve the website, then publish
VanessaYou and the broker-dealer's compliance team approve it. It needs a BrokerCheck link near the top and on the team bios, and links to our brochure.
Why: the website counts as advertising. Keep a dated copy of every version.
Client onboarding
RickCustodian accounts set up, brochure and supplement delivered before or at signing, signed agreement on file.
Why: you check the file is complete before the first trade.
Every year after
Once we're registered, this calendar is yours. Most RIA trouble comes from missed routine deadlines, not big decisions.
| What | When | Who |
|---|---|---|
| Annual update to Form ADV, plus a brochure update for clients | Within 90 days after the fiscal year ends | Vanessa |
| Update Form ADV when something material changes | Within 30 days | Vanessa |
| Mail LARA any change to the advisory agreement, changes highlighted | Within 30 days | Vanessa |
| Renew the firm and Rick's registration through IARD | Each year, before it expires | Vanessa |
| Continuing education: 12 credits (6 products and practice, 6 ethics) | Each calendar year | Rick |
| Tell LARA if net worth falls below the minimum | By close of the next business day | Vanessa |
| Renew the surety bond, if we have one | December 31 | Vanessa |
| Review our own procedures and test that we follow them | At least once a year (good practice) | Vanessa |
Do we need an office?
No. Michigan's rules that we found don't require commercial space, and many small advisers work from home.
Form ADV does need a real street address for the main office, not a PO box, and there's a box to check if it's a residence. That address is public on the SEC's adviser search site. Most small firms either list their home or rent a coworking or shared office so the home address stays private and there's somewhere to meet clients.
The broker-dealer side has its own rules. Since June 2024, FINRA allows a home to be a residential location as long as it isn't advertised, clients don't come there, and no client money or securities are handled there. If Rick meets clients at home or puts the home address on cards, the broker-dealer has to register it as a branch office, with inspections. The broker-dealer we pick decides how it treats our space.
Suggested: a small shared office or coworking address in Holland. Clients who prefer to meet in person can, and our home address stays off the public filings. Records can stay digital, as long as we can produce them when LARA asks.
Glossary
The words you'll see most, in plain terms.
RIA, registered investment adviser
A firm paid to give investment advice. Under about $100 million in client assets it registers with its state; above that, with the SEC.
IAR, investment adviser representative
A person who gives advice for an RIA. Rick will be ours. Each IAR registers individually and needs qualifying exams.
Broker-dealer and registered representative
A broker-dealer sells securities for commissions and is regulated by FINRA. A registered representative is a person registered with one. Rick will be both an IAR and a registered representative: that's the hybrid.
Fiduciary
Legally required to put the client's interest first. We're fiduciaries on advisory accounts. On commission sales, the broker-dealer's "best interest" standard applies instead.
Custodian and custody
The custodian is the outside firm that holds client accounts. "Custody" in the rules means we can access client money; deducting our fee directly from accounts counts, so it comes with extra procedures.
Discretion
Permission to trade a client's account without asking each time. It triggers Michigan's $10,000 net worth minimum.
Form ADV
The RIA's registration. Part 1 is the regulator's questionnaire; Part 2A is the client brochure; Part 2B is the supplement about each adviser. Firms our size in Michigan don't file the separate Form CRS; our broker-dealer has its own.
Form U4 and disclosure pages
The individual's registration form. Certain past events are reported on it, each with a short written explanation called a disclosure page. Accurate, plain answers matter more than anything else on it.
IARD and CRD
FINRA's online systems for filing adviser and broker registrations. IARD is the firm side; CRD holds individual records.
BrokerCheck and the SEC adviser search
Free public sites where anyone can look up a firm or person and see registrations and disclosures. Our website has to link to BrokerCheck.
Outside business activity
Any other job or business a registered person has. Rick's real estate and consulting companies count, and so does Vanessa's bank job for her role here. Each needs approval and disclosure.
LARA, FINRA, DIFS
LARA is Michigan's securities regulator for our RIA. FINRA regulates broker-dealers. DIFS is Michigan's insurance regulator for Rick's insurance licenses.