Written for independent consultants, fractional executives and small consulting firms that use employees or subcontractors.
The short version
- Check whether the new work is regulated.Investment advice, finder fees, legal drafting, visa work and patient data each sit behind a federal or state line.
- Refer the regulated part to a professional.Legal work goes to an attorney, investment and capital-raising work to a registered firm. Check that firm on FINRA BrokerCheck or the SEC's IAPD first.
- Write the boundary into your SOW.Say exactly which work is yours and which is theirs, and leave any fee tied to a deal closing to the registered firm.
Strategy, operations, turnaround, change, HR, IT and compliance consulting is the core of the work; investment, capital-raising, legal and licensed professional work stops at a regulated boundary. The risk comes from the work next door: recommending a fund menu, being paid a percentage for introducing investors, drafting a legal document, preparing a visa petition, or handling a health plan's patient data.
Investment advice
Anyone who, for compensation and as a business, advises others on the value of securities or whether to invest in them is an investment adviser. Lawyers, accountants and engineers are excluded only where the advice is solely incidental to their profession. Advisers with under $100 million of assets under management generally register with their state, not the SEC, and their individual advisers usually need the Series 65 or an equivalent. As of Oct 2026.
Investment Advisers Act of 1940 s.202(a)(11), 15 U.S.C. 80b-2(a)(11)
A consultant recommending a 401(k) fund menu, pension investments or specific securities is in scope. So is a financial planner or wealth manager.
Finder fees and deal work
A finder paid a success fee for introducing investors risks acting as an unregistered broker. The M&A broker exemption, in force from March 29, 2023, covers brokering the sale of a privately held company with under $25 million of EBITDA or $250 million of gross revenue, but not raising capital from passive investors. As of Oct 2026.
Securities Exchange Act s.15(a) and s.15(b)(13)
That fee is broker activity. Without registration it can be unenforceable, and the deal can be open to rescission claims.
Other reserved work
- Attest services and the CPA title are reserved under each state's accountancy act.
- Paid tax return preparation needs a PTIN (Treas. Reg. 1.6109-2).
- Legal advice, or drafting legal documents for others, is the unauthorized practice of law (for example California Bus. & Prof. Code 6125).
- Engineering services need a PE license in most states.
- Only attorneys and accredited representatives of recognized organizations may represent people before immigration authorities (8 CFR 292.1). An HR consultant can run Form I-9 processes, not visa petitions.
- Lobbying above federal, state or city thresholds requires registration and reports, so check each before taking a public affairs mandate.
Health and personal data
HIPAA business associates
A consultant who creates, receives or keeps protected health information for a provider, health plan or clearinghouse is a business associate and must sign a business associate agreement. A business associate is directly liable under the Security Rule and must report a breach to the covered entity without unreasonable delay and within 60 days of discovery. As of Oct 2026.
45 CFR 164.502(e), 164.504(e) and 164.410
In California, a consultant processing a business's personal information on its behalf is a service provider or contractor, and the contract must carry the CCPA terms (Civ. Code 1798.100(d) and 1798.140): a limited purpose, no selling or sharing, no combining with other data, and audit and notice rights. Do not put client data into a public AI tool, or one that trains on inputs, without the client's written permission.
Check before you refer work on: the SEC's IAPD and FINRA BrokerCheck show whether the firm you would pass investment or capital-raising work to is registered.
Asked in Greymill
5% of $3 million is $150,000, a fee tied to the raise. Without broker registration:
The fee can be unenforceable.
The deal can be open to rescission claims (claims to undo it).
Yours to do: genuinely unregulated strategy or preparation work, under a scope approved by securities counsel.
For a registered broker-dealer: picking investors, approaching them, introductions, negotiation and any fee tied to the deal.
Don't lean on the M&A broker exemption. It covers brokering the sale of a privately held company below set size limits, not raising money from passive investors.
Check the broker-dealer on FINRA BrokerCheck before you pass the raise on. Next, I can draft the scope wording for your SOW, ready for counsel to approve.
Ask it about your own business
Paste this into Greymill with your own figures, and Rules & Licensing works it through for your business.
I run a consulting business in [state], in the US. A client has asked me to [describe the extra work: introduce investors, recommend retirement plan funds, handle patient data, draft a contract, help with a visa] and has offered [fee basis]. Tell me whether any part of this is regulated, what registration or license it would need, and how to scope my SOW so I stay on the unregulated side.
More for consulting and advisory in the US
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- Can my consulting firm bring in other consultants as 1099 subcontractors?A consulting firm that subcontracts consulting work meets the strictest version of the classification tests, especially in California, so check before the first SOW.Read the lesson
- Winning government consulting work without being shut out by a conflictGovernment work rewards consultants who register early, pick the right route in, and keep clear of organizational conflicts of interest.Read the lesson
- A spoofed email diverted a payment, or a claim arrived after my E&O stoppedTwo consulting losses that land in the gaps between policies: a wire sent to a fraudster without social engineering cover, and a claim on old advice after the E&O has lapsed.Read the lesson
Open the interactive lesson · Every consulting and advisory lesson · What Greymill knows about the trade
Sources
The primary sources behind this lesson, checked Oct 2026.
- Advisers Act s.203A (When advice becomes regulated)
- 15 U.S.C. 78o(a), (b)(13) (When advice becomes regulated)
- Bus. & Prof. Code 6125 (When advice becomes regulated)
- 45 CFR 164.502(e), 164.504(e), 164.410 (Client data: HIPAA, state privacy and service-provider terms)
- Civ. Code 1798.100(d), 1798.140; 11 CCR 7051 (Client data: HIPAA, state privacy and service-provider terms)