Starting an RIA firm costs $10,000-$50,000 and takes 4-6 months. Register with your state if managing under $100M in assets, or with the SEC for $100M+. Key steps: form a business entity, set up an IARD account, file Form ADV, establish compliance policies, and select a custodian. You need to pass the Series 65 exam (no sponsor required).
Starting your own Registered Investment Adviser (RIA) firm offers independence, higher earning potential, and the ability to serve clients on your terms. The barriers to entry are lower than most people think: the Series 65 has no prerequisites, startup costs are manageable, and you can launch with zero assets under management.
This guide walks through the complete process from registration decisions to launch day.
Step 1: Determine Your Registration Type
The first decision is whether to register with the SEC or your state securities regulator. This depends primarily on how much money youâll manage. For a detailed breakdown of the registration process, see our state registration guide.
| AUM Level | Registration | Notes |
|---|---|---|
| Under $100 million | State | Register in your home state plus any state with 5+ clients |
| $100-110 million | Choice | Can register with either SEC or state |
| Over $110 million | SEC | Federal registration required |
| 15+ state registrations | SEC (optional) | May elect SEC regardless of AUM |
Starting with Zero AUM
You can absolutely start an RIA with no assets under management. Most new advisers register at the state level, then transition to SEC registration once they cross the $100 million threshold.
If you plan to be SEC-registered from day one, you have 120 days from launch to reach $100 million in AUM. This is common for advisers bringing a book of business from a previous firm.
State Registration Considerations
State-registered RIAs must register in:
- The state where you have a âplace of businessâ (typically your office location)
- Any state where you have more than a de minimis number of clients (usually 5)
Some states like Texas, Louisiana, Nebraska, and New Hampshire require notice filing before advising any resident clients, regardless of the de minimis exemption.
Step 2: Form Your Business Entity
Establish a legal entity before filing your RIA application. This provides liability protection and creates a clear ownership structure.
LLC (Most Common)
Flexible ownership and profit allocation. Pass-through taxation (income flows to personal return). Lower administrative burden. Can elect S-Corp taxation later. Best for most new RIAs.
S-Corporation
Reduces self-employment tax once profits exceed ~$80,000-$100,000. More rigid ownership rules (single class of stock). Additional compliance: Form 1120-S filing, K-1 issuance. Consider after LLC proves profitable.
Entity Formation Costs
Forming an LLC or S-Corp typically costs $200-$600, depending on your state. This includes state filing fees and registered agent services if needed.
Consult an attorney and CPA before choosing your entity type. The decision affects liability protection, taxes, and your ability to bring in partners or sell the business later.
Step 3: Set Up Your IARD Account
The Investment Adviser Registration Depository (IARD) is the electronic filing system for all investment adviser registrations. You must establish an IARD account before filing Form ADV.
IARD Setup Process
- Access the IARD website and request an entitlement packet
- Complete the SEC Registrant Entitlement Packet
- Wait 3-7 business days for FINRA to process
- Receive login credentials and firm CRD number
- Fund your IARD account for filing fees
The IARD account is where youâll submit Form ADV, pay registration fees, and manage annual renewals.
First Step: Pass the Series 65. On Your First Try
Before you can file your RIA application, you need to pass the Series 65 exam. Failing costs 30+ days in retake waiting periods, delaying your launch and burning operating capital. Learn [the 10 mistakes that cause failures](/series-65/study-guides/common-mistakes/) and how to avoid them, so you pass once and launch on schedule.
Access Free BetaStep 4: Complete Form ADV
Form ADV is the uniform registration application for investment advisers. It consists of multiple parts, each serving a different purpose.
Part 1A: Firm Information
Required for all advisers (SEC and state). Covers firm ownership, officers, affiliated businesses, disciplinary history, and types of clients served. Primarily âwhoâ questions about your firm structure. Filed electronically through IARD.
Part 1B: State-Specific Questions
Required only for state-registered advisers. Contains additional disclosure questions and allows you to select which states youâre registering in. Wonât appear in your IARD filing if youâre SEC-registered.
Part 2A: Firm Brochure
A narrative document describing your advisory services, fees, conflicts of interest, and disciplinary information. Must cover 18 specific disclosure items (19 for state-registered firms). Delivered to clients before or at the time of engagement. This is the brochure rule requirement.
Part 2B: Brochure Supplement
Information about the specific individuals who provide advice to clients. Includes educational background, business experience, and disciplinary history. Delivered along with Part 2A.
Part 3: Form CRS (Client Relationship Summary)
A two-page summary document for retail investors. Required for SEC-registered firms serving retail clients. Designed to be readable for average investors. Covers services, fees, conflicts, and disciplinary history in plain language.
Form ADV Timeline
- Preparation: 3-4 weeks to complete all parts
- SEC review: Up to 45 days (often faster)
- State review: 30-45 days (varies by state)
Incomplete applications cause the most delays. Regulators may request additional information about disciplinary history, affiliated businesses, or unclear ownership structures. Submit a thorough, complete application the first time.
Step 5: Develop Compliance Infrastructure
SEC Rule 206(4)-7 requires all registered investment advisers to adopt written policies and procedures designed to prevent violations of securities laws. You need these in place before launch. These policies reflect your fiduciary obligations to clients.
Required Compliance Elements
- Written Policies and Procedures: Covering portfolio management, trading, personal trading by employees, fee billing, recordkeeping, and client privacy
- Chief Compliance Officer: A designated individual responsible for administering the compliance program
- Code of Ethics: Standards for personal conduct and trading
- Annual Compliance Review: Documented review of policy adequacy and implementation
- Business Continuity Plan: Procedures for maintaining operations during disruptions
- Cybersecurity Program: Policies for protecting client data and firm systems
The CCO Role
Every RIA must designate a Chief Compliance Officer with authority to develop and enforce policies. For small firms, the owner typically serves as CCO. The CCO responsibilities include:
- Conducting compliance training
- Monitoring firm activities
- Performing the required annual compliance review
- Updating policies in response to regulatory changes
- Managing regulatory examinations
The SEC has filed actions against RIAs for failing to adopt compliance policies, maintain a Code of Ethics, or conduct annual reviews. These arenât optional paperwork requirements. Violations can result in enforcement actions and civil penalties.
Record Retention
Rule 204-2 requires RIAs to maintain books and records for a minimum of five years from the end of the fiscal year in which the last entry was made. This includes:
- Client communications
- Trade records and confirmations
- Advisory contracts
- Financial statements
- Compliance records
Step 6: Obtain E&O Insurance
Errors and Omissions (E&O) insurance protects your firm against claims of professional negligence, mistakes, or failure to deliver services. While not federally required, E&O insurance is:
- Required by most custodians (Schwab, Fidelity, Pershing all mandate coverage)
- Required in some states for RIA registration
- Essential protection for any advisory business
E&O Insurance Costs
| Coverage Level | Annual Premium | Notes |
|---|---|---|
| $1 million | $2,500-$4,000 | Standard coverage for small RIAs |
| $2 million | $3,500-$6,000 | Recommended as AUM grows |
| Deductible | $5,000 typical | Higher deductible = lower premium |
Providers like NAPA Benefits offer individual and group policies starting around $72/month for basic coverage.
Master Compliance Concepts for the Series 65
The Series 65 tests your understanding of regulatory requirements, fiduciary duty, and compliance obligations that every RIA must follow. CertFuel's adaptive system prioritizes these high-weight exam topics based on your performance.
Access Free BetaStep 7: Select a Custodian
A custodian holds your clientsâ assets and executes trades. Choosing the right custodian is one of your most important vendor decisions. This is also critical for compliance with the custody rule.
Major Custodians Compared
| Custodian | AUM Minimum | Custody Fees | Best For |
|---|---|---|---|
| Charles Schwab | None | $0 | New RIAs, small firms |
| Fidelity | Varies | Varies | Established RIAs |
| Pershing (BNY) | $100 million | Varies | Larger firms, institutional |
| Altruist | None | $0 | Tech-forward small RIAs |
Custodian Selection Factors
- Technology platform: Trading, reporting, client portal quality
- Service quality: Response times, dedicated support
- Integration: Compatibility with your planning and CRM software
- AUM minimums: Can you qualify? Will you outgrow them?
- Fee structure: Asset-based (10-15 basis points typical) or flat fee
Nearly 30% of RIAs now use two or more custodians to hedge operational risk. A dual-stack setup (like Schwab + Altruist) provides backup if one platform experiences outages or service issues.
Step 8: Build Your Technology Stack
Modern RIAs need technology for portfolio management, financial planning, CRM, and compliance. Expect to spend $2,000-$9,000 annually depending on firm size.
Core Technology Categories
Essential (Day 1)
- Portfolio management/rebalancing
- CRM (client relationship management)
- Secure document storage
- Email encryption
- Financial planning software
Important (Growth Phase)
- Client portal
- Risk assessment tools
- Performance reporting
- Digital onboarding
- Marketing automation
Hardware and Setup
Budget approximately $1,000 for essential hardware:
- Computer with adequate processing power
- Scanner/printer for client documents
- Secure backup system (cloud or local)
Total Startup Costs
Hereâs a realistic breakdown of what it costs to launch an RIA:
| Category | Cost Range | Notes |
|---|---|---|
| Compliance Consulting | $8,000-$15,000 | Form ADV preparation, policies, procedures |
| Entity Formation | $200-$600 | LLC or S-Corp filing fees |
| State Registration Fees | $200-$500 | ~$215 average plus $100/additional rep |
| E&O Insurance (Year 1) | $2,500-$4,000 | $1M coverage typical |
| Technology | $2,000-$5,000 | Software subscriptions, hardware |
| Website | $1,000-$3,000 | Professional design, hosting |
| Legal/Accounting Setup | $1,000-$3,000 | Entity formation advice, initial bookkeeping |
| Total Startup | $15,000-$30,000 | Typical range for new state-registered RIA |
First-Year Operating Expenses
Beyond startup costs, budget $20,000-$30,000 for first-year operating expenses including:
- Ongoing technology subscriptions
- E&O insurance renewal
- Marketing and client acquisition
- Office expenses (even if home-based)
- Professional development and CE credits
The blocking point for most new RIAs isnât startup costs. Itâs the âincome gapâ during the transition from employment to self-employment. You may need 6-12 months of living expenses saved before client revenue replaces your salary.
Timeline: From Decision to Launch
Weeks 1-2: Planning
Decide SEC vs. State registration. Choose business entity type. Consult attorney and CPA. Begin studying for Series 65 if not already passed. Most candidates need 4-8 weeks depending on background, so factor this into your launch timeline and capital planning.
Weeks 3-4: Entity Formation
Form LLC or S-Corp. Obtain EIN from IRS. Open business bank account. Set up IARD account.
Weeks 5-8: Documentation
Complete Form ADV (all parts). Develop compliance policies and procedures. Create Code of Ethics. Establish recordkeeping systems.
Weeks 9-12: Filing and Review
Submit Form ADV through IARD. Respond to any regulator questions. Wait for approval (30-45 days typical). Obtain E&O insurance.
Weeks 13-16: Launch Preparation
Finalize custodian agreement. Set up technology stack. Create client-facing materials. Build website. Begin marketing.
Weeks 17-20: Go Live
Receive registration approval. Sign custodian agreement. Onboard first clients. Deliver Form ADV Part 2 brochures.
Qualifications You Need
Required
- Series 65 exam (or equivalent: Series 7 + Series 66, or certain professional designations)
- Investment Adviser Representative (IAR) registration once you pass
- Business entity (LLC, S-Corp, etc.)
- Form ADV filing (approved by SEC or state)
Not Required
- Finance degree
- Prior industry experience
- Employer sponsorship for Series 65
- Minimum AUM to start
The Series 65 has no prerequisites and no sponsor requirement. You can register, study, and pass entirely on your own. This makes it the most accessible path to becoming a registered investment adviser. Use our week-by-week study schedule to structure your exam prep around LLC formation, Form ADV drafting, and other RIA launch tasks.
Common Questions When Starting
Can I start part-time?
Technically yes, but compliance and client expectations make this challenging. Most successful RIAs launch with full commitment. Some advisers start by building a book at an existing firm, then transition to independence.
Do I need an office?
No. Many RIAs operate from home offices, especially in the early years. Virtual meetings have become standard. Just ensure you have a professional setup for client interactions and secure document handling.
How do I get my first clients?
Most new RIAs start with:
- Existing relationships (friends, family, professional network)
- Referrals from CPAs, attorneys, and other professionals
- Former clients from a previous firm (check your agreement for restrictions)
- Content marketing and local networking
The hardest part isnât passing the exam or filing paperwork. Itâs building enough AUM to make the business financially viable.
Registration: State for under $100M AUM, SEC for $100M+. You can start with $0 AUM.
Timeline: 4-6 months from planning to launch. Registration review takes 30-45 days.
Costs: $10,000-$50,000 to start. First-year operations: $20,000-$30,000.
Requirements: Pass Series 65, form business entity, file Form ADV, establish compliance program, obtain E&O insurance, select custodian.
Your First Step: Pass the Series 65 exam. No sponsor required, no prerequisites. Once you pass, youâre eligible to register as an IAR or start your own RIA.