For many financial advisors hoping to create and grow their own advisory business, the registered investment adviser (RIA) registration process can be a mild to severe inconvenience. Here at RIA in a Box, we specialize in creating and submitting new RIA registration filings at the state and federal level while at the same time delivering best practice consultation and a heavy dose of hand-holding to prospective RIA firm principals throughout the process. The investment adviser registration process itself is a series of steps that can be arduous for many.
The first step a prospective firm must take is to determine whether to register with the Securities and Exchange Commission (SEC) at the federal level or instead at the state level. This is dependent on the anticipated types of clients, the types of services which will be offered, regulatory assets under management, and the states in which the investment advisory firm will conduct business. At this point, the prospective firm will also want to determine the total number of individual investment adviser representatives the firm will need to register.
The second step is to create a new account with the Financial Industry Regulatory Authority (FINRA) and the Investment Adviser Registration Depository (IARD). This is done by submitting an entitlement form directly to FINRA. Three to seven business days later, the prospective firm will receive a series of communications from FINRA with further instructions.
The third step, and the most complicated, is to construct the RIA firm’s Form ADV filings, specifically the Form ADV Part 1, Part 2A and Part 2B. These forms will detail the new advisory firm’s business practices and background of individuals associated with the firm. These documents must conform to the specific regulatory standards of the relevant state(s) or the SEC.
Once the Form ADV filings have been drafted, reviewed, and are ready for initial submission, the fourth step is to fund the established FINRA account with the appropriate registration filing fees. The total registration fee amount will be dependent on the number of investment adviser representatives, jurisdictions, and branch offices in addition to any required FINRA filing fees.
After funding the FINRA account and scheduling any required Series 65 examinations, the prospective investment advisory firm firm must submit the Form ADV documents along with any relevant state specific paperwork. This will trigger a review by the relevant regulatory body. The submitted filings are subject to comment letters and further review if they are found to be insufficient or unsatisfactory to the regulator in any way.
The new RIA firm’s application will not be complete without the submission of a Form U4, so the sixth step a prospective advisory firm must take is to submit the Form U4 or Form U4s at their discretion. Submission of a Form U4 will notify any firm that the investment adviser representative (IAR) is currently registered with, so the timing of this step is crucial and individual advisors should also review the details of the broker protocol. Once the Form U4 is submitted, the regulator will have the complete application for review.
If everything checks out and the regulator is satisfied, the new RIA firm’s initial registration application will ultimately be approved. The length of the entire registration process is subject to many factors including but not limited to the states in which the firm has requested approval, any potential issues with the application content, any proposed business practices that are not deemed acceptable by the relevant regulators, and generally the length of time in which it takes a prospective advisory firm to draft and create the numerous required filings.
At RIA in a Box, we have been an industry leader in creating successful new investment advisory firm applications in an efficient and compliant manner for over a decade. If you are looking to establish your own RIA firm, please contact us to learn more about how we can provide you the expertise and guidance to assist in your journey to true independence.