If I want to actively manage other people's money for a fee, is there a licensing or certification process I must undergo to be able to do so? --Andrew Danielson

Andrew,

So you say you want to run money.

Registering as an investment adviser is probably the easy part. Convincing people to give you their money could be tougher than making an Internet company profitable.

If you are holding yourself out to the public as someone who gives advice about securities and gets paid for it, you will need to register as an investment adviser.

"Holding yourself out" doesn't necessarily mean you're blatantly advertising your services in the local paper. It could be something as simple as having business cards on which you call yourself an investment adviser.

The point: You'll have to register with the appropriate securities regulator.

Both the

Securities and Exchange Commission

and the state securities agencies regulate investment advisers. The SEC oversees firms with more than $25 million under management. The states handle those with less than $25 million.

As a practical matter, the big and busy SEC doesn't typically handle the registration of individuals. That's left up to the states. Assuming that you don't manage $25 million or more, you should check the regulations of the state where you're doing business, says Barry Barbash, a partner at

Shearman & Sterling

and former director of the SEC's investment-management division.

You'll have to register your firm and/or yourself with the state, an exercise that's really one and the same if you're setting up your own firm.

First, most states require individuals to take a competency exam to become a registered investment adviser. Testing requirements vary from state to state, but the standard exam is the Series 65, a newly revamped test that covers four basic subjects: economics and analysis, investment vehicles, investment recommendations and strategies, and ethics and legal guidelines. The exam is administered by the

National Association of Securities Dealers

, which charges a $110 fee.

If you already have a professional designation, like Chartered Financial Analyst, you may be exempt from taking an exam.

If you are working for an SEC-regulated firm, like a large financial advisory firm, you may still be required to register as what's called an investment adviser representative in the state where you do business. That registration, again, might include a competency exam.

The

North American Securities Administrators Association

, the national organization of state securities agencies, offers details about the various types of required exams on its Web site

www.nasaa.org.

If you are starting your own firm, you'll have to file a Form ADV with your state or the SEC as part of the registration process.

Form ADV is the standard registration form for investment advisers. In it, you'll have to disclose your education, business and disciplinary background, whether you have discretion over clients' money, and the fees you plan to charge, among other things. This form and others are available on the

SEC's Web site.

Getting your hands on one of these forms is infinitely easier than filling it out.

Nicholas Stuller, director of sales with Lakeville, Conn.-based

National Regulatory Services

, a registration and client consulting firm, says his firm holds conferences on compliance and regulatory topics. And "we spend an entire day just on the Form ADV," he adds.

In total, you could be looking at spending about $750 just for the registration, estimates Duane Thompson, director of government relations at the

Financial Planning Association

in Washington, D.C. That would include the $110 you'll pay to take an exam plus study materials. Some states may require you to post a bond.

Those are the basic procedures for registering as an investment adviser. Now consider the practical matters.

Running your own firm, you need to know the appropriate regulations and you will be required to keep orderly books and records of all activities. And you can't favor yourself over your clients when it comes to trading.

"You need to keep files of client communications and complaints, keep records of transaction blotters or any errors that you make concerning clients," says Stuller. "Anywhere from 30 to 70 different files may be required of an adviser depending on the type of business that you have."

You can also expect recurring examination visits from regulators, who'll check to see if you're following all the rules and regulations.

Lastly and most importantly, you'll have to answer the following: Can you make a living as an investment adviser?

"You hang out a shingle, but you need a track record," says Alan Goldberg, an attorney with

Bell Boyd & Lloyd

in Chicago. And you'll probably need a record longer than a couple of years to attract enough assets to make it worth your while.

If you decide to charge your clients, say, 1% annually to manage their money, you'll need $10 million under management just to gross $100,000 in a year. And that's before taxes and expenses.

If you are serious about getting paid for giving people investment advice, you might want to think about going to work for a large firm first.

You'll be able to build a book of business and won't have to cope with administrative headaches like paying rent.

Starting your own mutual fund -- a topic covered in a previous

column -- is a different matter altogether. And if you're interested in less-formal investment clubs, read

this article on getting one started.

Send your questions and comments to

deardagen@thestreet.com, and please include your full name.

Dear Dagen aims to provide general fund information. Under no circumstances does the information in this column represent a recommendation to buy or sell funds or other securities.