Arguably one of the biggest hurdles to overcome when deciding to branch out and establish your own RIA is just that…making the decision to start the process.
However, that’s not to say you won’t face other challenges in the process. But for every challenge, there is a solution. Having worked with thousands of clients to help register and establish their RIA, it’s safe to say we’ve seen it all (or at least quite a bit).
In this blog, we’ll be sharing that expertise, highlighting some of the most common challenges and our expert advice for how to overcome them.
Overcoming Common RIA Registration Challenges
Challenge: Determining who to register with.
Solution:
To help answer this question, you’ll need to estimate and evaluate the assets under management (AUM) of your prospective RIA firm.
If that number is less than $100 million, you will need to register with the appropriate state. If your AUM is $100 million or more, you will need to register with the SEC.*
To determine what state(s) you should register in, you will need to consider the following:
- Where is your physical location or office?
- What states do you have representatives physically located in?
- In what states do you have five or more clients (or a single client in the states of Texas and Louisiana)?
- What states are you physically soliciting in?
When registering with the SEC, it’s important to bear in mind these additional factors:
- Advisory firms with a principal office and place of business in New York generally must register with the SEC if their AUM is $25 million or greater.
- Firms that serve as advisers to an investment company registered under the Investment Company Act of 1940 must register with the SEC regardless of AUM.
- RIAs that are required to register in 15 or more states will generally register with the SEC regardless of AUM as a multi-state adviser.
- Internet-only investment advisers may register with the SEC regardless of AUM.
*Keep in mind there are exceptions to this rule.
Challenge: Establishing Your Qualifications as an IAR/Registering Your IARs
Solution:
Let’s break this into two parts.
1. Establishing Your Qualifications
The Series 65 is the qualifying Uniform Investment Adviser Examination that an individual must pass to act as an IAR. There are exemptions available for one to meet the minimum competency requirements in most jurisdictions. One such exemption is the combination of holding both the Series 7 and Series 66 licenses.
There are several professional designations that will often be accepted in lieu of an examination. They include the Certified Financial Planner (CFP®), Chartered Financial Analyst (CFA), Certified Insurance Counselor (CIC), Chartered Financial Consultant (ChFC®), or Personal Financial Specialist (PFS).
2. Registering Your IARs
The SEC does not register individual investment adviser representatives (IARs); however, states have rules in place for the registration of IARs of SEC-registered firms.
Most states require an IAR of an SEC-registered firm to register in the state only if the IAR has a physical place of business in that state. This differs from state-registered firm requirements that may require IARs to register in any state where they service clients, and the firm is also required to be registered.
Challenge: Determining Who Should be the CCO.
Solution:
While the entire advisory firm is responsible for maintaining compliance, your CCO will act as the leader of this effort, ensuring Policies and Procedures are followed, new rules and their requirements are added into necessary documents and processes, and enforcing the repercussions should violations occur.
When selecting your CCO, it is important to consider:
- Investment Advisers Act Knowledge: To be specific, the SEC is looking for the CCO to be “competent and knowledgeable regarding the Investment Advisers Act of 1940.” Your CCO should at least have functional fluency in the Act and be able to navigate to the right internal or external sources with questions, should they have any.
- Hold Reasonable Authority: Part of the CCO job means getting the rest of the team to abide by compliance rules and procedures, so appointing a person of sufficient authority and seniority is important. The CCO needs to have deep knowledge of your firm’s culture and values and the authority to enforce the rules. The CCO must have executive buy-in and be able to function autonomously. Can this person make a decision that cannot be overwritten by the CEO?
Many firms will often partner with outside consultants or invest in automation to assist the CCO in fulfilling their duties as mandated by the SEC. Additionally, some firms do consider bringing in an outsourced CCO (OCCO); however, we recommend against that practice. Download our recent guide “Why an OCCO Might Not Be a Compliance Cure-All” for more information.
Note: Your CCO will also need to file a New Organization Super Account Administrator (SAA) Form.
Challenge: Managing the various and nuanced regulatory requirements, while also building your business, establishing your client base, and making a name for your firm.
Solution:
There’s a lot to check off your registration checklist. Which is why many firms will leverage outside experts (like those at COMPLY) to help facilitate the process.
A compliance consultant is a third-party compliance expert who can provide compliance guidance, advice, and ongoing support for firms. Newly registered RIAs may find it worthwhile to work with a compliance consultant to help you start out on the right foot by developing and implementing robust policies and procedures.
Beyond support in registering your firm, consultants can help you:
- Keep up with regulatory compliance changes
- Fine-tune your policies and procedures to your firm
- Run your annual compliance review
- Boost your RIA cybersecurity practices
- Provide guidance on RIA advertising and marketing
- Ensure your third-party vendors are up to snuff compliance-wise
- Increase insight into state- and local-level regulations
- Create scalable compliance practices
- Run mock audits and compliance reviews
- Ultimately, free up time to focus on what’s most important…your clients
Challenge: Maintaining compliance with the applicable regulators post registration.
Solution:
The SEC’s 2025 Exam Priorities yet again highlight the regulator’s ongoing focus on new firms. To ensure your program is up to par with their standards, we recommend a few key best practices.
- Ensure your Policies and Procedures are specific to your firm’s business practices, adjusting as necessary based on new practices and new rules
- Implement initial and ongoing training for all personnel within your firm. Reiteration of regulatory changes and regular check-ins are key to staying compliant and detecting potential violations.
- Review and archive all books and records according to your jurisdiction’s requirements. This may include:
- Website
- Social media
- Texts
- Off-channel communications
- Customer contracts
- Order tickets
- Cash disbursements
- Written agreements
- Bills and statements
- Implement a cybersecurity compliance program which addresses the nuances of your firm and its business.
- Regularly review your program (at least annually) to assess how comprehensive and effective your Policies and Procedures are. Document any findings and the remediations efforts you undertake following the review.
Note: This is not a complete list.
Ready to Register?
The registration process is a time-consuming one. But, with the right resources and support, it doesn’t have to be a roadblock to starting your own RIA.
Ready to register with the support of COMPLY’s registration expertise? Let’s talk.