In 1998, while I was a college student at the University of California, Santa Barbara, I became...
Over the past decade, there’s been a steady rise in advisers going independent and launching their own Registered Investment Adviser (RIA) firms. Whether markets are volatile or calm, the need for personalized investment advice has remained strong. If you’re considering starting your own investment advisory firm, here are some considerations.
Why Go Independent?
Independence offers freedom, control, and a higher share of your revenue. As the owner of your own firm, you decide how to serve clients, what fees to charge, and which technology and partners to use. Many advisers also go independent to build a legacy, offer niche services, or supplement existing tax and insurance practices.
What You Need to Establish an RIA
Unless you are a sole practitioner, you’ll need a legal entity like an LLC or S-Corp that can be registered as an investment adviser. Registering your advisory practice involves multiple decisions and puts you in control of your service offerings, your fee structure, and who your ideal clients are. These choices impact your operations, disclosures, and compliance obligations.
Should You Register with the SEC or a State?
Most of the time, this depends on the amount of assets you will manage. Generally, firms with under $100 million in assets under management register with their home state, while those with more register with the SEC. If your firm is state-registered and offers advice to clients in other states, your firm may need to register in these other states, as well.
What You Should Know about Compliance
Compliance isn’t optional, and a strong compliance program is essential. It should reflect your services and client base—not just boilerplate policies. The SEC and states have adopted rules and regulations applicable to advisers under their jurisdiction. Some requirements include maintenance of books and records, conducting compliance reviews, monitoring staff activity, and submitting regulatory filings. Don’t underestimate the value of a compliance consultant—they will help you navigate complex requirements and avoid costly errors.
Tech and Conflicts of Interest
Regulatory technology can streamline compliance tasks, but it can’t replace expert advice. The need for regulatory technology grows as a firm grows. The more staff it has and the more clients it takes on is commensurate with the need to find efficient ways to remain compliant. Just remember that understanding how the rules apply to your business is the first critical step to running a compliant firm. Starting with a compliance consultant can help you determine which regulations impact your practice so you can consider the need for investment in technology.
Final Thoughts
Starting your own RIA can be a fulfilling path, and there are great resources out there to support you. From experienced consultants to platforms and providers that cater to independent advisers, help is available. With the right planning and support, you can build a firm that’s truly your own—and thrive doing it.
