Michigan Investment Adviser Bond Guide
Investment advisers in Michigan can file a surety bond in place of meeting net worth requirements for registration. Learn how to navigate the bonding process with this complete guide.
Bond Overview
- Purpose: To ensure investment advisers act legally and protect client funds
- Who Needs It: Investment advisers that don’t meet the minimum net worth requirements for licensing
- Regulating Body: The Michigan Securities & Commercial Licensing Bureau
- Required Amount: Varies, typically $10,000–$35,000
- Premium Rates: Credit-based, starting at 1.5%
What Is a Michigan Investment Adviser Bond?
A Michigan investment adviser bond guarantees registered advisers will follow state regulations and laws. This surety bond protects clients funds from fraud or mismanagement by advisers.
How Much Do Investment Adviser Bonds Cost in Michigan?
Michigan investment adviser bond rates are typically 1.5–3% of the total bond amount. That means with strong credit, you could pay as low as $150 for a $10,000 bond or $525 or a $35,000 bond. Apply for your free, personalized quote below.
SuretyBonds.com offers the most competitive rates from our network of surety providers with no fees.
How Does a Michigan Investment Adviser Bond Work?
These bonds create a legal contract between three parties:
- Principal: You, the investment adviser purchasing the bond
- Obligee: The Michigan Department of Licensing and Regulatory Affairs, Corporations – Securities & Commercial Licensing Bureau
- Surety: The provider issuing the bond
As the principal, you are responsible for upholding the bond terms to the obligee. If you fail to do so, any harmed clients can file a claim for financial compensation.
The surety will pay out valid claims up to the full bond amount which you are responsible for refunding.
Do All Investment Advisers Have to File a Surety Bond?
Under the Section 406(2) of the Michigan Uniform Securities Act, any registered adviser with discretionary authority over client securities and funds must maintain a net worth of at least $10,000. If you have custody over client funds or securities, you need to maintain a minimum net worth of $35,000.
If you do not meet the minimum net worth requirements, you can file a surety bond instead for the full amount or remaining deficit. Confirm your required bond amount with the licensing bureau before purchasing.
How Do I Get an Investment Adviser Bond in Michigan?
SuretyBonds.com provides the fastest and easiest way to get an investment adviser bond. Just follow these four steps:
- Apply: Complete our quick online request form.
- Quote: Receive your free quote within one business day or less.
- Purchase: Buy your bond online or over phone.
- Receive: Receive your official bond form via email.
Upon receipt, file your bond with the obligee at the address below:
State of Michigan LARA-CSCL
Securities and Audit Division
P.O. Box 30018
Lansing, MI 48909
OR, for overnight shipping:
State of Michigan LARA-CSCL
Securities and Audit Division
2407 N. Grand River Ave
Lansing, MI 48906.
How Fast Can I Get My Bond?
We process most bonds in 24 hours or less. Apply now to receive your digital bond as quickly as the same day.
How Do I Renew My Investment Adviser Bond?
These bonds expire annually on December 31st. The Department will review and adjust your bond requirement at that time.
A SuretyBonds.com representative will also contact you 90 days before expiration with a renewal quote. Just pay your renewal invoice and we’ll issue a continuation certificate to extend your bond for another year if needed.
The issuing surety company can cancel the bond by providing 30-days written notice to the principal and the Administrator of Securities.
How to Become a Registered Investment Adviser in Michigan
The Michigan Department of Licensing and Regulatory Affairs — Corporations, Securities & Commercial Licensing Bureau oversees investment adviser registration. Complete the following steps to apply:
- Step 1: File Form ADV Part I and Part 2 and pay the $200 registration fee through the IARD system.
- Step 2: Download and complete the IARD entitlement forms.
- Step 3: Take the CSCL exam.
- Step 4: Provide copies of all advisory contracts you plan to use with clients.
- Step 5: Submit an up-to-date accrual basis balance sheet to the Bureau.
- Step 6: File a surety bond if needed to meet net worth requirements.
For more registration information, check out the resources linked below.
