Investment Adviser Registration: The $100M–$110M Buffer Zone

An investment adviser crosses into SEC territory at the $100 million mark, but the rule is built with a cushion on both sides. Under SEC Rule 203A-1, a firm with $100 million in regulatory assets under management may register with the SEC, a firm at $110 million must register, and a firm already registered federally does not have to withdraw until assets fall below $90 million.¹ The $20 million cushion around $100 million keeps advisers from switching regulators every time the market moves.

What Each of the Three Numbers Actually Triggers

The threshold is not a single line. It is three:

$100 million is the optional floor. A firm that reaches this level can register with the SEC, but does not have to. An adviser at $105 million may stay state-registered if that still fits the business.
$110 million is the mandatory ceiling. Once assets hit this level, the firm must register with the SEC unless a separate exemption applies.
$90 million is the withdrawal floor. An SEC-registered adviser does not have to leave federal oversight until assets drop below this line, so short-term market declines do not force a transition the firm would only need to reverse later.

The gap between $100 million and $110 million is the permissive zone where the adviser chooses its regulator. The gap between $90 million and $100 million shields existing registrants from involuntary deregistration. Both gaps exist because portfolio values move.

How You Measure the $100 Million

Where a firm sits relative to these lines depends entirely on its Regulatory Assets Under Management, or RAUM. The number is not a rough estimate. It follows the formula in Item 5.F of Form ADV.

RAUM is the total market value of every securities portfolio for which the firm provides continuous and regular supervisory or management services. If the firm manages only part of a portfolio, only that part counts. Assets managed by a subadviser or another person are excluded. Firms using umbrella registration with relying advisers must aggregate all relying advisers’ assets into a single Form ADV, which can lift a group over the threshold even when no individual adviser would cross it alone.²

What “Continuous and Regular” Means

Not every client relationship counts. The SEC treats you as providing continuous and regular services in two situations: you have discretionary authority over the account and provide ongoing management, or you lack discretion but have an ongoing responsibility to recommend specific investments based on the client’s needs and to arrange or execute trades if the client accepts your advice. A one-time financial plan with no ongoing relationship does not count.

Valuation Timing

p>Assets are valued at current market prices as of the Form ADV filing date. For portfolios holding derivatives or short positions, the SEC allows firms to use gross assets from the fund’s balance sheet under applicable accounting standards rather than a separate instrument-by-instrument valuation.³ A rising market in the months before fiscal year-end can push RAUM above $110 million and trigger a mandatory transition even if the client list has not changed. Track RAUM throughout the year, not just at filing.

Deadlines for Moving Up or Down

The transition runs through the Investment Adviser Registration Depository, the electronic system FINRA operates. Every adviser files an annual updating amendment to Form ADV within 90 days after fiscal year-end, updating Parts 1A, 1B, 2A, and 2B.² That amendment is what starts the switching clock.

State to SEC

If the annual amendment shows a state-registered adviser now holds $110 million or more, the firm must apply for SEC registration within 90 days of that amendment.¹ A firm with a December 31 fiscal year-end files its amendment by March 31 and then has until roughly late June to complete SEC registration. Advisers in the permissive zone between $100 million and $110 million can move up on the same schedule if they choose.

SEC to State

When an SEC-registered adviser’s annual amendment reports assets below $90 million, the firm files Form ADV-W to withdraw within 180 days of fiscal year-end.¹ Withdrawal takes effect when the IARD accepts the filing, though the SEC registration technically continues for 60 additional days so the SEC can bring enforcement actions if needed.⁴

During the transition the firm is registered with both the SEC and one or more states, and both federal and state law apply to advisory activities in that window. State registrations need to be in place before the SEC registration falls away, or clients can be left without a properly registered adviser.

Exemptions That Skip the Threshold Entirely

Several categories of adviser can register with the SEC regardless of asset level.

Multi-state advisers. A firm that would otherwise have to register in 15 or more states can register with the SEC instead, at any asset level.⁵
Internet advisers. Firms delivering advice exclusively through an interactive website or digital platform can register with the SEC without meeting any asset threshold. The adviser must serve all clients through the platform and keep records showing this for at least five years.⁶
Pension consultants. Advisers to employee benefit plans holding at least $200 million in plan assets may register with the SEC even if their own RAUM is below the normal threshold.⁷
Advisers to registered investment companies. Any adviser to a mutual fund or other investment company registered under the Investment Company Act of 1940 must register with the SEC regardless of size.

An exemption should be identified in Item 2 of Form ADV. If it later stops applying and assets are under $100 million, the firm has to transition to state registration.

SEC Registration Does Not End State Obligations

Federal registration does not free a firm from every state filing. A federally registered adviser still has to file notices in any state where it maintains a place of business or has six or more clients within a 12-month period. A notice filing typically means submitting a copy of Form ADV, filing a Form U-4 for each investment adviser representative working in that state, and paying the state’s notice filing fee. Fees vary by state and clear through IARD.

If You Get the Registration Wrong

Operating without the right registration, whether from miscalculating RAUM, missing a transition deadline, or ignoring the buffer thresholds, exposes the firm and its principals to civil or criminal action by the SEC and state regulators.⁸

Financial penalties are the most common outcome, but the downstream effects often matter more. Firms and individuals found in violation can face “bad actor” disqualification, which blocks them from raising capital through Regulation D exemptions. Clients may have a right of rescission, meaning the firm has to return advisory fees with interest. Future investors and institutional clients routinely demand compliance representations and opinion letters as a condition of doing business, so a registration gap can complicate capital raising for years afterward.⁸

If your RAUM is anywhere near $90 million or $110 million, build the transition plan before the number forces the decision.

1
eCFR. 17 CFR 275.203A-1 – Eligibility for SEC Registration; Switching to or From SEC Registration
2
U.S. Securities and Exchange Commission. Form ADV – General Instructions
3
U.S. Securities and Exchange Commission. Frequently Asked Questions on Form ADV and IARD
4
eCFR. 17 CFR 275.203-2 – Withdrawal From Investment Adviser Registration
5
Office of the Law Revision Counsel. 15 USC 80b-3a – State and Federal Responsibilities
6
eCFR. 17 CFR 275.203A-2 – Exemptions From Prohibition on Commission Registration
7
U.S. Securities and Exchange Commission. Regulation of Investment Advisers by the U.S. Securities and Exchange Commission
8
U.S. Securities and Exchange Commission. Consequences of Noncompliance