Are you acting as an Investment Advisor?

August 19, 2025  |  By

In today’s world of private deals, capital raising, and independent deal-making, it’s easier than ever for business leaders and sponsors to find themselves offering investment guidance—sometimes without even realizing it. Whether you’re advising on a potential acquisition, structuring a deal for outside investors, or helping others evaluate opportunities, there’s a good chance you’re providing advice about securities.

Here’s the catch: if you’re providing that advice for any form of compensation, you may be stepping squarely into regulated territory. Under both federal and state law, this could mean you’re required to register as an investment adviser—just like a professional wealth manager or fund manager.

Yes, even if your primary role is that of a founder, consultant, banker, or independent sponsor. Securities laws don’t focus on job titles—they focus on what you’re actually doing and whether you’re getting paid for it.

So, What Is an “Investment Adviser,” Really?

The definition is broader than you might think. Both the federal Securities and Exchange Commission (SEC) and states like Texas use essentially the same language:

“An investment adviser is any person who, for compensation, engages in the business of advising others—either directly or through publications—about the value of securities or whether to buy, sell, or invest in securities, or who provides analyses or reports about securities as part of a regular business.”

So, what does that really mean? It means if you’re giving guidance—publicly or privately—on investments AND you’re receiving any kind of economic benefit, you might be subject to these laws. And unless you qualify for an exemption, you must register.

When Does This Apply?

Let’s break down the main elements that can trigger investment advisor registration requirements. 

You’re Getting Paid

Compensation doesn’t just mean a consulting fee. It includes anything of value – money, gifts, services, promotional deals, or even bartered favors. If your advice is tied to any sort of benefit, directly or indirectly, that may count. 

You’re In the Business of Advising

You don’t have to be a full-time investment coach or run a financial firm. If you give advice regularly, or even promote yourself as someone who does, this threshold might be met. Therefore, there are questions you need to ask yourself, such as:

  • Do I market myself (online or offline) as someone who gives investment advice?
  • Do I get paid because of that advice?
  • Do I do this often enough for it to look like a business?

One-time, isolated conversations might not trigger registration, but patterns and compensation will. 

You’re Just Giving Investment Advice

This doesn’t just mean recommending specific stocks. It can include:

  • Sharing market predictions or economic trends
  • Suggesting asset allocation strategies
  • Advising someone to work with (or avoid) another financial professional
  • Offering curated lists of securities to consider

Even general commentary or “educational” content can cross the line if it’s tied to securities and compensation.

Final Thoughts

For professionals operating in fields like law, accounting, consulting, or coaching, offering investment-related guidance may seem like just a part of delivering excellent client service. However, as this post makes clear, providing advice about securities – especially when compensation is involved, can quickly shift your role into one that is regulated under securities law. Understanding when your services cross into the realm of investment advising is critical. Not only does it protect your clients, but it also helps you avoid legal and regulatory risks that could potentially affect your business. If investment advice is part of your work, even occasionally, it’s worth taking a closer look at whether registration or an exemption applies. 

Kevin would like to thank VW law clerk, Emily Keller, for her help with this blog.

Posted in: Funding & Capital Raising

About the Author(s)

Kevin Vela

Kevin is the managing partner at Vela Wood. He focuses his practice in the areas of venture financing, M&A, fund representation, and gaming law.

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