RIA Registration Requirements: Form ADV, IARD, and Compliance

To meet RIA registration requirements, you file Form ADV electronically through the Investment Adviser Registration Depository (IARD) with either the Securities and Exchange Commission or your state securities regulator, pass a qualifying exam (or hold an accepted credential), pay the filing fee, and put a written compliance program in place. Which regulator you file with depends mostly on your assets under management: firms managing $110 million or more must register with the SEC, and smaller firms generally register with their home state. Once registered, you take on a fiduciary duty under the Investment Advisers Act of 1940, which includes both a duty of care and a duty of loyalty to every client.¹

SEC or State: Which Regulator You File With

Section 203A of the Advisers Act draws the line by assets under management. If your principal office is in a state that regulates advisers and you manage less than $25 million, you cannot register with the SEC and must register with your state instead. Mid-sized advisers managing between $25 million and $100 million are also generally barred from SEC registration unless they advise a registered investment company or would otherwise have to register in 15 or more states.²

Around the $100 million mark, SEC Rule 203A-1 builds in a buffer so firms don’t switch regulators every time markets move:

Below $100 million: state registration only, unless an exception applies.
$100 million to $110 million: you may choose SEC or state.
$110 million and above: SEC registration is mandatory.
Already SEC-registered: you can stay with the SEC as long as your AUM stays at $90 million or above. Drop below $90 million and you must withdraw and register with your state.

So a firm sitting at $105 million doesn’t have to rush a federal filing, and a firm that dips to $95 million during a downturn doesn’t have to scramble to switch.³

Whether You Can File as an Exempt Reporting Adviser Instead

Some advisers who advise only private funds or only venture capital funds don’t have to fully register. They file as exempt reporting advisers (ERAs) and submit a shorter version of Form ADV.

Private fund advisers: those who advise only private funds and manage less than $150 million in the United States may rely on the exemption under Section 203(m).
Venture capital fund advisers: those who advise only venture capital funds qualify under Section 203(l), with no AUM ceiling.

ERAs complete only selected items of Part 1A (Items 1, 2, 3, 6, 7, 10, and 11, plus corresponding schedules). They do not prepare the Part 2 brochure, the Part 2B supplement, or Form CRS. They still file an annual updating amendment within 90 days of fiscal year end, and they must promptly amend when key information changes. If a private fund ERA grows to $150 million or more in AUM, it has 90 days after filing its annual amendment to apply for full SEC registration.⁴

If you advise separately managed accounts, retail clients, or anything other than the fund types above, the ERA path is not available and you register the normal way.

What Form ADV Contains

Form ADV is the single registration document used by both the SEC and state regulators, and it has five distinct components rather than the “two parts” it is often described as having.⁴

Part 1A collects structured data about your firm: ownership, business practices, types of clients, employees, affiliations, and any disciplinary events involving the firm or its personnel. Disclosure Reporting Pages within Part 1A capture the details of any regulatory or legal problems in the firm’s history.⁵ Part 1B asks additional questions required by state regulators, so SEC-only registrants can skip it.

Part 2A is the narrative brochure, written in plain English and delivered to every advisory client. It covers your investment strategies, fee structures, conflicts of interest, and affiliations with other financial entities. Part 2B is a brochure supplement covering the specific supervised persons who advise clients. Part 3 is Form CRS, a standardized relationship summary for retail investors.⁴

Qualifying to Give Advice

Every individual who will provide advice as an investment adviser representative must demonstrate competence. The most common path is passing the Series 65 (Uniform Investment Adviser Law Examination), which covers regulations, ethics, investment strategies, and economic analysis.⁶ An alternative combines the Series 7 with the Series 66, which together cover the same ground plus broader securities knowledge.

Several professional designations can substitute for the Series 65 if they are current and in good standing: CFA (Chartered Financial Analyst), CFP (Certified Financial Planner), ChFC (Chartered Financial Consultant), PFS (Personal Financial Specialist), and CIMA (Certified Investment Management Analyst). Not every state accepts every designation, so confirm with your state regulator before relying on a waiver.

Form U4

Every individual associated with the firm completes Form U4, which collects the background information regulators use to vet them.⁷ The form requires five years of residential addresses and ten years of employment history, and it asks about criminal history, regulatory actions, customer complaints, and civil judicial proceedings.⁸ Regulators use this to determine whether an individual is subject to statutory disqualification, which can bar them from the industry entirely.

Continuing Education

NASAA’s model rule requires investment adviser representatives to complete 12 credits annually: six in Products and Practices and six in Ethics and Professional Responsibility. Each credit represents at least 50 minutes of instruction. In states that have adopted the rule, a deficiency accumulates to a maximum of 36 credits and can block future state registrations even if you leave the industry and later try to return.⁹

Compliance Program You Need Before Registration Is Effective

Registration is not just a filing. Rule 206(4)-7 requires every registered adviser to adopt written policies and procedures designed to prevent violations of the Advisers Act, review those policies at least annually, and designate a chief compliance officer to run the program.¹⁰

Separately, Rule 204A-1 requires a written code of ethics that sets standards of business conduct for all supervised persons. “Access persons,” meaning anyone involved in making investment recommendations or with access to nonpublic information about client trades, must periodically report personal securities holdings and transactions to the CCO. The code must also require supervised persons to promptly report violations.¹¹

The SEC has also proposed that registered advisers adopt written business continuity and transition plans covering operational disruptions. The specifics continue to evolve, but firms should plan for how client accounts would be handled during emergencies, technology failures, or a wind-down.¹²

Filing Through IARD and What It Costs

All Form ADV filings go through the Investment Adviser Registration Depository (IARD), an electronic system sponsored by the SEC and NASAA, with FINRA as the developer and operator.¹³ You create an account, fund it to cover filing fees, and submit Form ADV electronically.

The SEC’s IARD filing fees are tied to AUM:

$100 million or more: $225 initial, $225 annual renewal.
$25 million to $100 million: $150 initial, $150 annual.
Less than $25 million: $40 initial, $40 annual.

Those are SEC fees only.¹⁴ State-registered firms pay separate fees to their state securities authority, and individual adviser representatives pay per-state registration fees. Build these into your launch budget.

Net Worth and Bonding

Many states impose minimum net worth requirements or surety bond obligations, particularly for advisers who exercise discretion over client accounts or maintain custody of client assets. Under the NASAA model rule, advisers with discretionary authority generally need a minimum net worth of $10,000, and those who maintain custody face a $35,000 minimum. If your net worth drops below the required minimum, you typically must notify your state regulator the next business day and may need to obtain a surety bond covering the shortfall. Exact requirements vary by state.

Review Timeline

After you submit, the SEC generally has 45 days to declare your registration effective.¹⁵ State timelines are similar, though state examiners may request additional documents during the review window. IARD notifies you once registration is effective.

Whether You Have Custody of Client Assets

If your firm has custody of client assets, Rule 206(4)-2 adds an entire layer of regulation on top of registration, and many firms do not realize the definition reaches them. You are considered to have custody if you have authority to withdraw funds from a client account beyond deducting your advisory fees, hold client login credentials, act as trustee or executor for a client, or serve as general partner of a pooled investment vehicle.¹⁶

If any of those apply, client funds and securities must be held with a qualified custodian, clients must receive written notice and at least quarterly statements from that custodian, and an independent public accountant must verify client assets through an unannounced examination each calendar year and file a certificate on Form ADV-E with the SEC. The surprise audit alone makes custody expensive, and smaller firms often structure their operations specifically to avoid triggering it.

What You Have to Do After You’re Registered

Registration begins, rather than ends, your obligations.

Annual Updating Amendment

Every registered adviser must update Form ADV within 90 days after fiscal year end. For calendar-year firms, that means March 31. You update all items and schedules, and you deliver the revised Part 2A brochure to existing clients. Material changes to certain items, such as disciplinary events or ownership changes, also trigger a prompt amendment outside the annual cycle.⁴

Annual Compliance Review

Rule 206(4)-7 also requires at least one annual review of your compliance policies. The review should test whether your written policies match what your firm actually does and whether they remain adequate as the business evolves. The CCO typically leads it and documents the findings.¹⁰

Recordkeeping

Rule 204-2 requires firms to maintain specific categories of records for at least five years, with the first two years easily accessible. That includes trade blotters, client communications, advertising materials, performance records, internal memos, and electronic communications such as emails, texts, and social media messages related to advisory services. The electronic communications piece catches many newer firms off guard, especially those whose advisers use personal phones or messaging apps with clients.

Marketing Rule

Rule 206(4)-1 governs any communication that offers or promotes advisory services to more than one person. It prohibits untrue statements, omissions of material fact, one-sided discussions of benefits without balanced treatment of risks, and misleading performance presentations.¹⁷ Two areas cause the most trouble. If you show gross performance of an individual investment or a subset of a portfolio, you generally must show the net performance of that extract alongside it.¹⁸ And the rule permits testimonials and paid endorsements only with clear and prominent disclosures about client status, compensation, and conflicts, plus a written agreement for anyone compensated more than $1,000 over the prior twelve months.

Penalties for Getting It Wrong

Section 217 of the Advisers Act makes any willful violation a criminal offense punishable by a fine of up to $10,000, imprisonment for up to five years, or both.¹⁹ The SEC can also bring civil actions seeking disgorgement of fees, prejudgment interest, monetary penalties, and cease-and-desist orders, and it can suspend or revoke your registration. False or misleading information on Form ADV falls within these enforcement powers. Even omissions that seem small at filing, like an undisclosed prior regulatory action against an employee, can surface years later during an examination and escalate into a formal proceeding.

1
Securities and Exchange Commission. Commission Interpretation Regarding Standard of Conduct for Investment Advisers
2
Office of the Law Revision Counsel. 15 USC 80b-3a – State and Federal Responsibilities
3
eCFR. 17 CFR 275.203A-1 – Eligibility for SEC Registration; Switching to or from SEC Registration
4
Securities and Exchange Commission. Form ADV General Instructions
5
U.S. Securities and Exchange Commission. Form ADV
6
Financial Industry Regulatory Authority. Series 65 – Uniform Investment Adviser Law Exam
7
FINRA. Form U4
8
Financial Industry Regulatory Authority. Form U4 Uniform Application for Securities Industry Registration or Transfer
9
North American Securities Administrators Association. Investment Adviser Representative Continuing Education
10
eCFR. 17 CFR 275.206(4)-7 – Compliance Procedures and Practices
11
U.S. Government Publishing Office. 17 CFR 275.204A-1 – Investment Adviser Codes of Ethics
12
U.S. Securities and Exchange Commission. Adviser Business Continuity and Transition Plans
13
IARD. What Is IARD
14
U.S. Securities and Exchange Commission. Electronic Filing for Investment Advisers on IARD
15
Securities and Exchange Commission. Electronic Filing for Investment Advisers on IARD – How to Register as an SEC Investment Adviser
16
eCFR. 17 CFR 275.206(4)-2 – Custody of Funds or Securities of Clients by Investment Advisers
17
eCFR. 17 CFR 275.206(4)-1 – Investment Adviser Marketing
18
U.S. Securities and Exchange Commission. Marketing Compliance – Frequently Asked Questions
19
Office of the Law Revision Counsel. 15 USC 80b-17 – Penalties