If you own or operate a wealth management firm and need your NAICS code, here is your answer right away.
The primary NAICS code for a wealth management firm is 523940, classified under Portfolio Management and Investment Advice in the Finance and Insurance sector. While older classification systems used to separate these functions into different codes, the current 2022 standard combines portfolio management and investment counseling into this single, unified code. This page covers how this code applies to your financial practice so you can ensure it is the right fit.
| Field | Details |
|---|---|
| NAICS Code | 523940 |
| Industry Title | Portfolio Management and Investment Advice |
| Sector | 52 (Finance and Insurance) |
| Industry Group | 5239 |
| Last Updated | 2022 NAICS Edition (Next NAICS Edition will come in 2027) |
What Does NAICS Code 523940 Cover?
According to the official 2022 NAICS data, code 523940 covers establishments primarily engaged in providing customized investment advice and managing client portfolios and assets.
In simple terms, this code applies to financial professionals who are paid to tell people what to do with their money, and often are given the legal authority to actually manage that money for them. For wealth management businesses, this includes:
- Providing customized financial planning and retirement strategies
- Managing investment portfolios and asset allocation (typically charging a fee based on Assets Under Management, or AUM)
- Giving investment counseling on securities, bonds, mutual funds, and ETFs
- Acting as a fiduciary and Registered Investment Advisor (RIA)
- Managing pooled investment funds or family office assets
The important distinction here is advice and asset management. This code covers the intellectual work of analyzing markets and adjusting client portfolios, but it does not cover the physical execution of stock trades for public commissions, nor does it cover holding customer cash deposits.
Does My Wealth Management Business Qualify for Code 523940?
Your business qualifies for NAICS code 523940 if:
- You operate as a Registered Investment Advisor (RIA) managing client assets
- Your main source of revenue comes from AUM fees, flat retainer fees, or financial planning fees
- You provide customized investment advice tailored to individual client goals
Your business may not qualify if:
- You execute stock trades for clients and earn money primarily through commissions, which falls under 523120 (Securities Brokerage) instead
- You underwrite and issue new stocks and bonds, or facilitate corporate mergers, which falls under 523110 (Investment Banking and Securities Dealing) instead
- You take in customer deposits and offer checking/savings accounts, which falls under 522110 (Commercial Banking) instead
- You primarily sell life insurance or annuities rather than managing investment portfolios, which falls under 524114 (Direct Health and Medical Insurance Carriers) or 524126 (Direct Property and Casualty Insurance Carriers) instead
When your business sits between two codes, always classify based on whichever activity generates the most revenue.
Where Will You Need This Code?
Your NAICS code appears in more places than most financial professionals expect. Here is where code 523940 will be required:
- SEC and State Regulatory Filings. This is highly critical. When you register your firm as a Registered Investment Advisor (RIA) and file your Form ADV with the SEC or your state regulators, you are required to provide your NAICS code to classify your business operations.
- Professional Liability Insurance (E&O). Insurance providers use this code to calculate your Errors and Omissions premiums. If you give bad investment advice or mismanage a client’s retirement fund, you need specific professional liability coverage tailored for investment advisors.
- Custodian Account Applications. When you open master accounts with custodians like Charles Schwab, Fidelity, or TD Ameritrade to hold your clients’ assets, the custodian will ask for your NAICS code to verify your RIA status.
- SBA Loan Applications. If you need financing to scale your practice, hire new advisors, or upgrade your office space, the Small Business Administration requires your NAICS code to assess your loan eligibility.
- Business Bank Accounts. Many banks ask for your NAICS code when opening a business checking or operating account for your management fees.
523940 in the NAICS Hierarchy
Every NAICS code sits inside a structured hierarchy. Here is exactly where 523940 fits:
| Level | Code | Title |
|---|---|---|
| Sector | 52 | Finance and Insurance |
| Subsector | 523 | Securities, Commodity Contracts, and Other Financial Investments |
| Industry Group | 5239 | Other Financial Investment Activities |
| NAICS Industry | 52394 | Portfolio Management and Investment Advice |
| National Industry | 523940 | Portfolio Management and Investment Advice |
Frequently Asked Questions
What is the difference between 523940 and 523120 (Securities Brokerage)?
The difference lies in how you charge your clients and what services you provide. Code 523940 is for fee-based wealth management and investment advice (like an RIA charging 1% of assets under management). Code 523120 is for commission-based brokerages (like traditional stockbrokers who earn money every time they buy or sell a stock for a client).
Are the older codes 523920 and 523930 still valid?
No. In previous years, the government split portfolio management (523920) and investment advice (523930) into two separate codes. However, in the 2017 and 2022 NAICS editions, the government consolidated these into a single code—523940—to better reflect the modern wealth management industry, where advising and managing assets happen under the same roof.
Does this code cover a financial planner who doesn’t actually manage the money?
Yes. As long as your primary business is providing customized investment advice and financial planning for a fee, you fall under 523940, even if the client takes your advice and executes the trades themselves at a separate brokerage.
What if my wealth management firm also sells life insurance?
You must classify your business based on the activity that generates the majority of your revenue. If 70% of your income comes from AUM fees and financial planning, and 30% comes from selling life insurance premiums, your primary code is 523940. If the majority of your income actually comes from insurance sales, you would default to an insurance carrier code.