One of the first steps in starting an RIA firm is to become properly registered as a Registered Investment Advisor (RIA) firm. The RIA registration process is administered at either the SEC or state jurisdiction level. FINRA does not have any regulatory authority over RIAs, but it does administer the online application system for the registration of RIAs and their investment advisor representatives.
While there are some exceptions, in general, investment advisors who start an RIA firm with $100 million or greater in assets under management (AUM) must register with the SEC as Registered Investment Advisor (RIA). For a list of some of the common exceptions which allow an investment advisor with less than $100 million in AUM to register with the SEC, check out the SEC Investment Advisor Registration Overview.
Exceptions aside, prospective RIA firms who start an RIA with less than $100 million in AUM must generally register with the relevant state(s). In general, an RIA subject to state registration must register in any state in which it has a physical location, a representative physically located there, has 5 or more clients (or a single client in the states of Texas and Louisiana), or is physically soliciting in that state. Do keep in mind that there are some exceptions to these general guidelines. Each state’s registration process is also unique to the individual state. For a directory of each state’s RIA registration requirements, check out the Investment Advisor State Registration Directory.
General Overview of the SEC and State Registered Investment Advisor (RIA) Registration Process
Investment Advisor Representative (IAR) Registration Requirements (administered at the state level):
Licensing Requirements: Series 65, Series 66 and Series 7 combined, or CFP, CFA, CIC, ChFC, PFS.
Each investment advisor representative must submit the form U-4 and ADV Part 2B in the relevant state(s).
General Firm Registration Requirements
Payment of all SEC and/or state registration filing fees
FINRA Entitlement paperwork
In order to file a registered investment adviser application with the SEC or a state, one must first apply to the Financial Industry Regulatory Authority (FINRA) for an account (Entitlement) to their WebCRD/IARD on-line system (the web application for the registration of RIAs and their representatives). While RIA’s are in no way regulated or supervised by FINRA, the SEC and states uses FINRA’s WebCRD/IARD system to process applications.
Form ADV 1 (online)
The Form ADV Part 1 is the on-line component to your Firm’s registration documentation. Note: The Form ADV Part 1 primarily discloses information about the FIRM. Individual information is primarily disclosed in the Form U4 as detailed below. The Form ADV Part 1 is also the vehicle to upload your Firm’s Form ADV Part 2A (Firm Brochure) and Form ADV Part 2B’s (Brochure Supplements).
Form ADV 2A (paper and online)
The Form ADV Part 2A acts as your Firm’s Brochure. It is a narrative description of your services, fees, disciplinary disclosures, as well as several other Firm details. The Form ADV Part 2A must be provided to all Clients and Prospective Clients. The SEC and states require that the ADV Form 2A be written in “plain English” and easily understood by your clients.
Form ADV 2B (paper and online)
The Form ADV 2B is the paper brochure that Investment Adviser Representatives must (in most cases) provide to clients. This form contains employment, educational, conflict of interest, and disciplinary information. Generally, Executive Officers, any person generating investment advice provided to clients, and any representative advising clients must have a Form ADV Part 2B.
Client Advisory Contract
Client Advisory Contract including an investment policy statement that meets the appropriate regulatory authority standards for client advisory contracts..
Policies and Procedures Manual
The firm’s Policies and Procedures manual is the guiding document that your firm will use to maintain and enforce your firm’s internal policies on all aspects of your business from the handling of client complaints to the training of new Investment Adviser Representatives. It also houses your firm’s Business Continuity Plan, Anti-money Laundering Policy, and Anti-insider Trading Policy.
Privacy Policy Statement
The Firm’s Privacy Policy Statement must be provided to all clients at the beginning of the client relationship and annually thereafter. It must disclose how the firm stores, and handles and disseminates client information. Privacy Policy Statements are built to your firm’s specifications and designed to meet SEC or state requirements.
Code of Ethics
Code of Ethics filing ensuring that you meet the standards of the SEC or state(s).
Over 3,500 investment advisors have trusted RIA in a Box as their registration compliance consultants to help them start an RIA and our mission is to enable fellow entrepreneurs to establish their own RIA firms and remain in constant compliance with regulatory guidelines. RIA in a Box is the fastest, most efficient way to start your advisory firm at the state or SEC level and we also offer on-going monthly compliance services packages beginning at $250 per month. We are staffed by ex-regulators and believe we offer incredible value that can’t be matched. Check out the RIA in a Box Investment Advisor Registration Box Package.
Note: RIA in a Box LLC is not a law firm, investment advisory firm, or a CPA firm. RIA in a Box LLC does not provide legal advice or opinions to any party or client. You should always consult your relevant regulatory authorities as this information should not be relied upon as currently accurate. This information is provided for educational purposes only and is not an exhaustive list of regulatory requirements.
