As an adviser breaking away from an existing broker-dealer or larger registered investment adviser (RIA) and setting out to establish your own firm, you have quite a lot to decide. Something you may not have considered: whether you should establish your firm and begin the RIA registration process before or after you have invested in an RIA compliance technology.
Recently, some advisory firms have begun investing in and implementing their RIA compliance technology before beginning the process of registering either at the state or federal level. Why? Let’s explore.
Investing in an RIA compliance technology before completing your new firm registration
While historically, many advisory firms have waited until after state or Securities and Exchange Commission (SEC) registration to start the process of selecting and implementing a regulatory compliance technology, firms today have found by investing in a technology before completing their RIA registration they avoid the hassle of manual compliance tasks.
As you likely know, implementing a new technology or software doesn’t just happen overnight. The process takes time, as it should, given the serious and critical nature of the data flowing into the system. Time, during which, the RIA is responsible for maintaining compliance through whatever means possible. Which in many cases means the RIA firm must institute manual processes while waiting for their system to get up and running.
Such manual processes are often time consuming, taking away from the hours you could be spending attracting and working with clients.
By taking the time to invest in a new regulatory compliance technology BEFORE registering with the relevant regulatory body, firms can ensure they are up and running from day one. Thereby avoiding the hassle of manual tasks and ensuring compliance from the very start of their firm.
While not every firm will follow this practice, it is clear this trend has gained some traction as more and more new firms begin the implementation process prior to any registration activity.
RIA in a Box LLC is not a law firm, investment advisory firm, or 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 or legal counsel if applicable.