A Registered Investment Adviser (RIA) is a firm or individual that provides investment advice for compensation and is registered with either the Securities and Exchange Commission (SEC) or a state securities regulator. RIAs are held to a fiduciary standard and must comply with a range of regulatory obligations. This article outlines what defines an RIA, when registration is required, and how the registration process differs between federal and state jurisdictions.
What Is a Registered Investment Adviser?
An RIA is defined under the Investment Advisers Act of 1940 as any person or firm that provides investment advice to clients for compensation. RIAs are distinct from broker-dealers in that they are legally obligated to act in their clients’ best interests at all times, a fiduciary duty that includes full disclosure of conflicts, fair allocation of investment opportunities, and best execution of trades.
RIAs typically manage client portfolios and charge fees based on assets under management (AUM). Individuals who work for RIAs and provide advice are known as Investment Adviser Representatives (IARs) and must meet licensing requirements, such as passing the Series 65 exam or holding equivalent credentials like CFP®, CFA, ChFC®, CIC, or PFS.
When Is RIA Registration Required?
Federal (SEC) Registration
SEC registration is generally required for firms with $100 million or more in AUM. Firms with $110 million or more must register with the SEC. Those between $100 million and $110 million may choose either SEC or state registration. Firms below $100 million typically register with state regulators unless:
Their principal office is in a state that does not require adviser registration (e.g., New York or Wyoming).
They are required to register in 15 or more states.
They advise investment companies or meet other specific criteria.
SEC-registered firms must also file notice in certain states, such as Texas, Louisiana, Nebraska, and New Hampshire, before engaging with resident clients, regardless of client count or physical presence.
State Registration
Advisers with less than $100 million in AUM generally register with state securities regulators. Each state has its own rules, including thresholds for client count (often five or more), physical presence, and solicitation activity. Some states require registration or notice filings even for a single client.
Registration Process
RIAs register through the Investment Adviser Registration Depository (IARD) system and must file:
Form ADV Part 1: Firm structure, ownership, and services.
Form ADV Part 2A: Narrative brochure describing services, fees, and conflicts.
Form ADV Part 2B: Information about individual IARs (required for state registration).
Form ADV Part 3 (Form CRS): Relationship summary for retail clients.
SEC registration typically takes 30–45 days. State registration timelines vary widely, from 24 hours to several months depending on the jurisdiction.
Exemptions from Registration
Certain entities and individuals are exempt from RIA registration, including:
Advisers who work exclusively with U.S. government securities.
Venture capital fund advisers and private fund advisers with less than $150 million in AUM (Exempt Reporting Advisers or ERAs).
Foreign advisers with no U.S. clients.
Individuals advising only immediate family members.
ERAs must still file abbreviated Form ADV disclosures and comply with anti-fraud provisions and fiduciary duties.
Compliance Obligations
RIAs must maintain:
A written compliance program overseen by a Chief Compliance Officer.
Accurate books and records.
A code of ethics.
Annual updates to Form ADV and prompt amendments for material changes.
Delivery of updated Form ADV Part 2A to clients within 120 days of fiscal year-end.
SEC examinations focus on fiduciary duty, cybersecurity, marketing practices, conflicts of interest, and supervision of remote personnel. State regulators often emphasize books and records, fee disclosures, and registration accuracy.
Final Thoughts
Understanding when and how to register as an RIA is essential for any investment advisory firm. The decision between SEC and state registration hinges on AUM, business footprint, and client base. While the process can be complex, proper planning and compliance infrastructure can make registration a strategic advantage.