Introduction: Who is an Investment Adviser?
Some definitions that have been in use to describe the adviser and/or what the adviser can do in several climes are as captured below:
1. Any person or body corporate who, for compensation (a flat fee or percentage of assets managed), offers investment advice. This definition includes a person who issues written reports or analyses for compensation.
2. An individual or organization that manages and makes day-to-day investment decisions regarding the purchase or sale of securities. Also called a Portfolio Manager/Administrator.
3. A firm or individual who is compensated for providing advice to investors about the value of securities or the advisability of buying and selling securities.
4. Any person who, for compensation, engages in the business of advising others, either directly or through publications or writings, as to the value of securities or as to the advisability of investing in, purchasing, or selling securities, or who, for compensation and as part of a regular business, issues or promulgates analyses or reports concerning securities.
5. A person or persons who carries on the business of advising others concerning securities; or as part of a regular business, issues or publishes analysis or reports concerning securities; or pursuant to a contract or arrangement with a client, undertakes on behalf of the client for compensation, the management of a portfolio of securities for the purpose of investment.
In the Nigerian context, the most familiar definition is as presented in the last one (No.5) above, save for the aspect of compensation/fees which remains debatable to the extent whether the service in Nigeria currently has enough regulation in this direction? A very clear line of thought that is common in all the definitions is the establishment of the need for utmost good faith and trust in the dealings between the adviser as the expert in his field and the client as the consumer of his services or products. In this wise, all relationships between the adviser and his clients, existing and prospective, require the solid foundation upon which the interest of the client is foremost before any other. By his expertise and ability to provide such services, the adviser automatically is put in a position to consistently ensure fair and justifiable dealings with his clients to the extent that the interests and eventual benefits of the relationship to the client are not in any way made subject to those of the adviser. In summary, the adviser is regarded as occupying a fiduciary position in the relationship with his clients over critical decisions in contracted discretionary investment guidance and products for (i) personalized, and (ii) outsourced, CIO services, including on equity and debt securities, pension and mutual funds, ETFs and REITS, alternatives, including Real Estate, Private Equity, Derivatives, Arts, Insurance protection, including endowment and annuities, and others.
Who is a Fiduciary?
According to the Legal dictionary at law.com, a rather comprehensive definition of a fiduciary as deemed appropriate to our context is as follows:
“From the Latin word fiducia, meaning “trust,” a person (or a business like a bank or stock brokerage) who has the power and obligation to act for another (often called the beneficiary) under circumstances which require total trust, good faith and honesty. The most common is a trustee of a trust, but fiduciaries can include business advisers, attorneys, guardians, administrators of estates, real estate agents, bankers, stockbrokers, title companies or anyone who undertakes to assist someone who places complete confidence and trust in that person or company. Characteristically, the fiduciary has greater knowledge and expertise about the matters being handled. A fiduciary is held to a standard of conduct and trust above that of a stranger or of a casual business person. He/she/it must avoid “self-dealing” or “conflicts of interests” in which the potential benefit to the fiduciary is in conflict with what is best for the person who trusts him/her/it. For example, a stockbroker must consider the best investment for the client and not buy or sell on the basis of what brings him/her the highest commission. While a fiduciary and the beneficiary may join together in a business venture or a purchase of property, the best interest of the beneficiary must be primary, and absolute candour is required of the fiduciary”.
Membership of CIIA
Membership of the CIIA is in two broad categories
A. REGULAR MEMBERS: are practising members of the CIIA already registered with the SEC and are up to date with their registration obligations with the regulator. Regular members will have their correspondences with clients and the general public affixed with their respective CIIA registration codes. There are regular corporate and individual investment advisers.
B. AFFILIATE MEMBERS: are members of the CIIA yet to be registered with the SEC and are already in the process of obtaining such registration, OR those in agreement with the values of the CIIA, wishing only to benefit from her programmes but without any intention of practising as advisers.
All current SPONSORED INDIVIDUALS of regular members, directly involved in providing investment advice to their principals’ clients (investors) otherwise known as ADVISER REPRESENTATIVES, are affiliate members of the CIIA by default. All affiliate members will be assigned special registration codes with the CIIA. Adviser representatives as affiliate members cannot practise on their own except duly registered by the SEC as an Individual Investment Adviser, with the minimum 48 months cognate experience in advisory practice.
How to become a Regular CIIA Member:
The following steps explain how individuals and corporate investment advisers can transit from an aspirant position to regular membership of the CIIA.
Individual Investment Advisers
Step 1: A good first degree in the Accounting, Finance & Banking, Actuarial Science, Insurance, Economics and Business Studies disciplines, OR equivalent professional certification including ACA, ACCA, CFA, CFP, CIPM, ASA, AIA, CAIA, ACS, CPA, AIPM, and others as recognised by council in due course.
Step 2: Minimum 48 months cognate experience in buy side advisory role.
Step 3: Registration with the SEC
Step 4: Registration with CIIA
Step 5: Payment of Annual Subscription
Step 6: Complete your annual CE programme.
Note: Steps 3 & 4 are mutually exclusive and can come in any order
Corporate Investment Advisers
Step 1: Incorporation with the CAC
Step 2: Registration with the SEC
Step 3: Registration with CIIA
Step 4: Payment of Annual Subscription
Step 5: All sponsored individuals to complete their annual CE programme.
Note: Steps 2 & 3 are mutually exclusive and can come in any order
Registration at any point in time with CIIA before the SEC’s qualifies the entity only as an affiliate member but they cannot practice investment advisory functions in the Nigerian market until the registration with the SEC is procured.
Your registration process starts by clicking the account creation tab below. Once this process is completed, an email is automatically sent to the email address you provided in the account opening form. Please follow the instructions in the mail to complete the registration and annual subscription payment processes.