Understanding Your RIA Regulatory Responsibilities

The rules and regulations governing the financial advisory industry are continuously evolving, and understanding and navigating the regulatory environment can seem daunting—especially for Registered Investment Advisors (RIAs) who are just starting out.

More than half of Independent Broker-Dealer (IBD) Advisors (52%) cited concerns about greater regulatory liability when operating independently and 34% cited uncertainty about future RIA regulation.[1]

To remain compliant, RIAs must keep up with rules set by the SEC and state regulators, including requirements for fiduciary duties, client disclosures, and investment practices. Navigating these regulations is critical to avoid penalties and safeguard client interests.

Here’s what you need to know:

IAR Registration

Registering as an Investment Adviser Representative (IAR) is a key element of fulfilling your RIA registration requirements.

Depending on your specific duties performed at an RIA firm, if you’re providing investment advisory services—asset or wealth management, investment analyses, financial planning, research—or acting as a solicitor/promoter you may be required to register as an IAR.

Exams

For individuals seeking to become IARs and provide fee-based investment advice at RIA firms, the Series 65 exam is required in most states.[2] Those who aren’t offering regular advice or charging fees may not need the Series 65. Certified Financial Planners (CFPs), Certified Public Accountants (CFAs), or individuals with Series 7 and 66 may also qualify for exemptions.[3]

The Series 65 exam[4] is a North American Securities Administrators Association (NASAA) exam administered by FINRA (which is a Registered Trademark of the Financial Industry Regulatory Authority, Inc.).

The exam evaluates an individual’ s ability to understand financial concepts and provide investment advice to clients. It covers:

• Client investment recommendations and strategies
• Economics and business information
• Investment vehicle characteristics
• Laws, regulations, and guidelines

The Series 7 exam,[5] the General Securities Representative Qualification Examination (GS), tests entry-level representatives on essential knowledge for selling securities, including stocks, bonds, mutual funds, options, variable annuities, and other investment products.

The Series 66 exam[6] is a North American Securities Administrators Association (NASAA) exam administered by FINRA. Combines the Series 63 (state securities law) and the Series 65 content into one exam. While there is no prerequisite for this exam, the Series 7 exam is a co-requisite.

State Investment Advisor or SEC Registration

Depending on your firm’s size and location and assets under management (AUM), you’ll either register with your state’s securities regulator or the Securities and Exchange Commission (SEC).

Here’s a breakdown:

State Investment Adviser Registration

• Under $100 million AUM must register with the state(s) where they operate unless exempt

For more information about state-specific requirements, COMPLY has created the Investment Adviser State Registration Requirements Directory.

SEC Investment Adviser Registration 

• $110 million AUM+ must register with the SEC
  • $100 - $110 million may choose to register with the SEC or remain with the state
• Must file within the state(s) the firm maintains a place of business or has more than five clients in the past 12 months*

Key Exceptions and Exemptions 

• Private Fund Advisers: May be exempt from SEC registration under the Private Fund Adviser Exemption (less than $150 million in private fund AUM in the U.S., no retail clients).

*Note: SEC registered firms are required to notice file in LA, NE, NH, or TX before engaging in advisory services with resident clients in those states regardless of how many clients or place of business.

Form Filings

Here’s a concise breakdown of the required Form ADV filings for RIAs:^[7],[8],[9]

Note: To begin operating as an SEC-registered RIA, you’ll need to register via the Investment Adviser Registration Depository (IARD) system.

• Form ADV Part 1A
  • Purpose: Provides basic information about the Advisor’s business such as, but not limited to, ownership, clients, employees, business practices, affiliations, and any disciplinary events
  • Requirements: Must be filed electronically through the IARD
  • Frequency: Filed at initial registration and updated annually within 90 days after the end of the fiscal year
    • Other-than-annual amendments are required if material information changes

• Form ADV Part 2A (Brochure)
  • Purpose: Offers a narrative description of the Advisor’s services, fees, conflicts of interest, and disciplinary information, among other areas of the advisor’s business
  • Requirements: Must be written in plain English and delivered to clients initially and offered annually
  • Frequency: Updated annually within 90 days of the firm’s fiscal year-end and whenever there are material changes along with client notification, which can be a summary of changes page

• Form ADV Part 2B (Brochure Supplement)
  • Purpose: Provides information about specific individuals who provide investment advice to clients, including their education, business background, and disciplinary history
  • Requirements: Must be delivered to clients before or at the time the individual begins providing advice
  • Frequency: Updated promptly if there are material changes

• Form ADV Part 3 (Form CRS)
  • Purpose: Summarizes the relationship between the Advisor and the client, including services offered, fees, conflicts of interest, and the standard of conduct
  • Requirements: Must be written in plain English, cannot exceed two pages, and must be delivered to retail investors[10]
  • Frequency: Updated whenever there are material changes
    • Must be filed through the IARD system within 30 days of any material change and delivered to existing retail clients within 60 days

• Form ADV-E**
  • Purpose: Filed by custodians of client assets to certify that a surprise examination was conducted to ensure proper handling of client funds
  • Requirements: Filed electronically through IARD
  • Frequency: Filed annually, within 120 days after the end of the fiscal year

**Note: Required if you have custody of client funds or securities.[11]

Compliance Requirements

RIAs starting out should also consider these essential compliance obligations:

• Written policies and procedures – reviewed and tested annually
• Designated Chief Compliance Officer (CCO) – All RIAs, regardless of size, must designate an internal CCO, who may also take on other roles
  • CCO must be included on the initial ADV Part 1A. Item 1.J
• Code of Ethics – Required by the SEC, which sets standards of conduct for “access persons” and helps prevent conflicts of interest, particularly around personal trading and client confidentiality
• Archiving communications – all client-related communications (e.g., emails, texts, social media) must be archived
• Marketing materials – SEC-registered firms must comply with the SEC Marketing Rule 206(4)-1
• Client disclosures – must ensure accuracy and timeliness in all client-facing documents

Your Fiduciary Duty

An RIA’s fiduciary duty is a legal requirement to prioritize clients’ best interests, offering advice based solely on their goals and risk tolerance—even if it conflicts with the RIA’s own interests.

The Investment Advisers Act of 1940[12]—a U.S. law that establishes standards and oversight for professionals who provide investment advice to individuals, institutions, and pension funds—sets compliance standards for SEC-registered and many state-registered RIA firms. Under the Act, Financial Advisors are legally required to act in their clients’ best interests and uphold fiduciary standards.

Navigating Regulatory Requirements

Complying with regulatory requirements as an RIA may feel overwhelming—but it doesn’t have to be. Investing in compliance tools, partnering with experienced compliance officers, consultants, and legal teams, or working with a Turnkey Asset Management Provider (TAMP) can help RIAs reduce risks, interpret new compliance rules, and ensure their firm remains up to date.

TAMPs like the Symmetry Axiom Wealth Platform can help RIAs streamline and automate compliance processes through a third-party platform provider and maintain audit trails.

Need some guidance getting started? Our Regional Team can help. Connect with us to set up a discovery call. Want to learn more about our TAMP solution? Schedule a demo to find out how Axiom can help enhance your business.

For Financial Professionals Only. Symmetry Partners, LLC provides this communication on this site as a matter of general information. Information contained herein, including data or statistics quoted, is from sources believed to be reliable but cannot be guaranteed or warranted. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. All content on this site is for educational purposes and should not be considered investment advice, recommendation or offer of any security for sale. Symmetry Partners does not provide tax or legal advice and nothing either stated or implied in this material should be inferred as providing such advice. Symmetry Partners does not approve or endorse any third-party communications on this site and will not be liable for any such posts. 

Symmetry is an investment advisory firm registered with the Securities and Exchange Commission (SEC). The firm only transacts business in states where it is properly registered or excluded or exempt from registration requirements. Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the SEC. Please be advised it is the financial advisor’s responsibility to check with its own firm Compliance Department or OSJ for usage requirements related to marketing strategies.

[1] The Cerulli Edge, U.S. Advisor Editon, The Advisor Affiliation Issue, Cerulli Associates, 2024

[2] State Investment Adviser Registration Information, NASAA, https://www.nasaa.org/industry-resources/investment-advisers/state-investment-adviser-registration-information

[3] Palmer, B., “Introduction to the Series 65 Exam,” Investopedia, October 2024, https://www.investopedia.com/articles/professionaleducation/11/intro-series-65-exam.asp

[4] Series 65 – Uniform Investment Adviser Law Exam, FINRA, https://www.finra.org/registration-exams-ce/qualification-exams/series65

[5] Series 7 – General Securities Representative Exam, FINRA, https://www.finra.org/registration-exams-ce/qualification-exams/series7

[6] Series 66 – Uniform Combined State Law Exam, FINRA, https://www.finra.org/registration-exams-ce/qualification-exams/series66

[7] “Form ADV,” Investor.gov, U.S. Securities and Exchange Commission, https://www.investor.gov/introduction-investing/investing-basics/glossary/form-adv

[8] Hayes, A., “Form ADV-E: What It is, How It Works, FAQs,” July 2023, https://www.investopedia.com/terms/s/sec-form-adv-e.asp

[9] “Investor Bulletin: Form ADV – Investment Adviser Brochure and Brochure Supplement,” Investor.gov, U.S. Securities and Exchange Commission, June 2016, https://www.investor.gov/introduction-investing/general-resources/news-alerts/alerts-bulletins/investor-bulletins-71

[10] Frequently Asked Questions on Form CRS, U.S. Securities and Exchange Commission, https://www.sec.gov/rules-regulations/staff-guidance/trading-markets-frequently-asked-questions/frequently-asked-questions-form-crs

[11] “17 CFR § 275.206(4)-2 - Custody of Funds or Securities of Clients by Investment Advisers,” Cornell Law School, Legal Information Institute, https://www.law.cornell.edu/cfr/text/17/275.206%284%29-2

[12] Investment Company Act of 1940 [As Amended Through P.L. 117–263, Enacted December 23, 2022], https://www.govinfo.gov/content/pkg/COMPS-1879/pdf/COMPS-1879.pdf