What to Know Before Starting an RIA: A Practical Guide

In today’s ever-changing financial services landscape, more advisers are breaking away from larger firms to launch their own Registered Investment Adviser (RIA) practice. The rewards? Greater autonomy, stronger client relationships, and the ability to build long-term enterprise value. But with independence comes new responsibilities—especially when it comes to compliance and registration.

This blog distills the key insights from our recent eBook, “Establishing Your Own RIA: Your Registration and Compliance Questions Answered,” to help you navigate the journey.

Why Go Independent?

Going independent means calling the shots—on fees, service models, and technology—without another party’s oversight and interests. You can select the tech stack and vendors that work best for your practice and your clients, retain a higher percentage of your fees (often 75–95% after expenses), and design your business around your strengths. Many advisers also cite legacy building, niche specialization, and cross-practice synergies (like tax planning or insurance) as major motivators.

Your First Critical Decisions

Before you register, you’ll need to make a few foundational choices:

• Legal Entity Structure – Most RIAs operate through an LLC, S-Corp, or partnership. Sole practitioners can register as both the firm and the adviser representative, but many choose separate entities for succession and sale flexibility.
• Service Offering – Decide if you’ll offer financial planning, portfolio management, wrap fee programs, or other advisory services. If you have ancillary, non-advisory services to offer, review the pros and cons of offering these services under the same entity as the adviser or via a separate entity. Succession and resale often play a role in this decision, too.
• Client Base – Identify your target market and understand any compliance implications of serving new client types.
• Fee Structure – Choose between asset-based, fixed, or hourly fees, and determine billing frequency.
• Key Roles – Designate a Chief Compliance Officer (CCO)—a regulatory requirement in most cases—along with other operational responsibilities.

Registration: SEC or State?

Whether you register with the Securities and Exchange Commission (SEC) or your state regulator depends on your assets under management (AUM):

• State Registration – Generally required if AUM is under $100M (with exceptions, such as $25M in NY).
• SEC Registration – Required for AUM over $100M, pension consultants with $200M+ in plan assets, or firms required to be registered in 15+ states.

If you serve clients in multiple states, understand the de minimis rules (often five clients before registration/notice filing is required) and be aware of state-specific exceptions.

Building a Compliance Program

Regulatory compliance isn’t optional—it’s the backbone of your practice. A tailored compliance program should:

• Reflect your specific services and clients.
• Be administered by your CCO.
• Avoid unnecessary “boilerplate” policies that don’t fit your firm.

While regulatory technology can streamline tasks like trade monitoring or electronic communications review, it can’t replace the judgment of an experienced compliance professional.

Managing Conflicts of Interest

Going independent may reduce certain conflicts—like earning commissions and advisory fees from the same client—but others remain. Transparency and disclosure are non-negotiable. Examples include:

• Referral arrangements with compensation.
• Offering ancillary services like insurance or accounting.
• Relationships with specific product providers.

Your compliance consultant can help you identify, mitigate, and disclose these appropriately.

Ongoing Compliance Obligations

Compliance doesn’t stop after registration. Key ongoing requirements include:

• Annual Regulatory Filings & Client Disclosures (Form ADV updates, Form CRS, Form U4, and potentially Forms 13F/13H/N-PX).
• Privacy Protections under Regulation S-P.
• Books and Records retention requirements.
• Annual Compliance Reviews for SEC firms and some state registrants.
• IAR Continuing Education where required by state law.
• Best Practices in cybersecurity.

The Bottom Line

Launching your own RIA is an exciting opportunity to shape your future on your terms. With over 15,000 independent advisers in the U.S., there’s a robust ecosystem of vendors, platforms, and consultants ready to help you succeed. The key is preparation: make the right foundational decisions, implement a strong compliance program, and seek expert guidance from day one.

Your independence is an asset—protect it with the right strategy and compliance framework.