RIA Firms: Are You Properly Registered in the States You Have Clients?

Saturday, July 25, 2015

We regularly encounter this question when working with investment advisors interested in establishing their own new RIA firms, or existing firms going through the renewal process at the end of the year. It is critical to be properly registered in the states you have clients in since you cannot charge advisory fees if you are not.

Because most states follow the same general rules pertaining to the “de minimis exemption,” RIA firms must register or notice file under the following circumstances:

  • The RIA firm has a physical office location in the state
  • The RIA firm has more than 5 clients residing in the state
  • The RIA firm is actively soliciting in the state

It is also important to understand how the regulators define “clients”. When counting clients in a state, remember that members of the same household count as a single client. So, if you are managing assets for a married couple, residing in a state, that household counts as a single client.

At present, there are only two states that require an RIA Firm to notice file or register before taking on a single client. Those states are Texas and Louisiana. This is important to take into consideration if you are considering growing your business by expanding into other states or if one of your clients moves to a new state.

As always, because states often make regulation changes, it is a good idea to check with either your state regulator or RIA compliance consultants to confirm the latest RIA registration and notice filing requirements.

Everyone at Red Oak Compliance Solutions stands ready to assist you with any questions regarding this or any other compliance matters.

About Red Oak Compliance Solutions

Red Oak Compliance Solutions is a leading provider of intelligent compliance software, offering a range of AI-powered solutions designed to help firms of all sizes successfully navigate the increasingly complex regulatory landscape. Our suite of 17(a)-4/WORM compliant features offer risk minimization, cost reduction, and process optimization capabilities with features that are designed to evolve with our client’s needs. Our flagship advertising review software enables firms to deliver compliant content to the market with confidence, faster. Our Disclosure Management and Intelligence solution simplifies the management of disclosures, while our Registration Management solution automates and streamlines the licensing and registration process, further enhancing your internal processes. 

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