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Financial advisors can generally work with clients in other states without registering there, provided they have no place of business in the state and serve no more than five clients there in a 12-month period. This is known as the de minimis exemption. Once that threshold is exceeded, serving out-of-state clients effectively may require strong communication practices, secure digital tools and a reliable network of local professionals in each client’s state.
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Registration Requirements for Multi-State Advisory Services
Before diving into client management strategies, let’s first review registration requirements for advisors who serve clients in multiple states. The de minimis exemption allows registered investment advisors (RIAs) to work with a smaller number of clients in a state without requiring them to register there. Section 222(d) of the Investment Advisers Act of 1940 specifies that states generally cannot require registration if an advisor:
- Has no place of business in that state
- Had five or fewer clients residing in the state in the preceding 12 months
Ifyou have no place of business in a state and five or fewer clients residing there during the preceding 12 months, you may qualify for the de minimis exemption from registration in that state. You would, of course, still need to register with your state or the SEC, depending on your firm’s assets under management (AUM).
Note, however, that some states have specific rules regarding registration and de minimis exemption:
| State | Registration Rule |
|---|---|
| Louisiana | Louisiana does not provide a separate state de minimis exemption. Advisors should review Louisiana’s registration requirements and the federal Section 222(d) standard before serving clients there. |
| Nebraska | Out-of-state advisors generally qualify for the five-client de minimis exemption from state registration, but SEC-registered advisors are required to file notice before conducting business in the state. |
| New Hampshire | De minimis exceptions are allowed only for state-registered advisors, not SEC-registered advisors. |
| Texas | Out-of-state advisors with no place of business in Texas and five or fewer Texas clients are exempt from registration, but must make a notice filing and pay the applicable fee. |
The NASAA maintains an index of all state de minimis exemption rules, including the states listed above. 1
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Managing Clients in Multiple States
Managing clients that aren’t local to you requires a combination of effective communication, solid tech infrastructure and a commitment to collaboration. If you’d like to broaden your geographic footprint, consider these common strategies to stay connected with your clients:
Establish Communication Policies
Face-to-face meetings with out-of-town or out-of-state clients may be a rarity, so you’ll need to rely on other methods to stay in touch. That includes emails, text messages, phone calls and direct mail.
Talk to your clients about which communication methods they prefer, and how often they’d like to hear from you, outside of regularly scheduled meeting times. A 2024 YCharts Advisor Client Communication Survey provides a helpful framework: 2
- 39% of clients want to hear from their advisor monthly
- 40% are comfortable communicating every two to three months
- 36% are comfortable meeting by phone or video chat
- 61% prefer email for receiving advisor insights, while 41% are happy with a phone call
- 26% are okay with text communications
Notably, 81% of clients say increased communication would make them more likely to refer their advisor to friends and family. Review your current frequency, then ask your out-of-town clients directly: Is this working for you?
Once you collect their feedback, use it to inform your communication policies for those clients. Provide them with an updated copy of the policy, along with a note about the best ways to reach you in time-sensitive situations. This provides clarity on both sides, and helps clarify how non-local clients can reach you when they need assistance.
Build Your Digital Infrastructure
Technology can help solve some of the problems that may arise when managing clients in various locations. There are some specific use cases where tech tools can come in handy:
| Challenge | Solution | Examples |
|---|---|---|
| Holding client meetings | Video conferencing tools enable advisors to meet with clients virtually on a flexible schedule; some include an AI note-taking feature to capture meetings seamlessly | Zoom Microsoft Teams Google Meet |
| Obtaining client signatures/managing documents | Document management tools allow you to collect signatures electronically and store digital documents securely | Box for Financial Services Egnyte Redtail |
| Transparency and client access | Financial planning software or CRMs that include a secure portal allow clients to stay connected to their money and monitor their plan 24/7 | Orion eMoney Advisor Wealthbox |
| Compliance | Compliance and recordkeeping software can help advisors stay current with regulatory rules and archive client communications | RegED Comply (formerly RIA in a Box) Global Relay Archiving |
If you offer tax planning services, you may also consider a tax software that accounts for differences in tax law across state lines. Holistiplan is one example of a tax software that’s built for financial advisors and includes multi-state planning options.
Form Collaborative Connections
You may be just one professional your out-of-state clients turn to for advice. Their team may also include a CPA who’s well-versed in their state’s tax rules, an estate planning attorney familiar with the laws of their state, local bankers and a local insurance agent.
Forming relationships with these individuals can help you better serve your clients if you’re all working together with a common purpose. When everyone is on the same page, that reduces the odds of the client receiving conflicting or potentially harmful advice.
These professionals may also become centers of influence for you if they have other clients who could benefit from your services. Demonstrating your value through the level of service you provide to your clients may prompt them to send referrals your way.
Ask your clients to introduce you to their team. Once an introduction is made, request a few minutes of their time to discuss how you can work together to serve the client’s needs.
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Frequently Asked Questions (FAQs)
Can Advisors Serve Clients in Multiple States?
Yes, advisors can serve clients who live in different states other than the one they’re registered to do business in. Whether you’re also required to register with regulators in those states depends on how many clients you serve in each one, and the state’s rules regarding de minimis exemptions.
How Can Advisors Market Their Services to Clients in Other States?
Advisors can market their services to prospective clients in locations outside their immediate area through digital marketing strategies. Building a following on social media, leveraging LinkedIn for lead generation, improving your visibility in search engines using search and answer engine optimized content, running digital ads and creating a compelling lead magnet are some of the ways advisors can attract the attention of prospects online.
What Happens If an Advisory Client Moves to a New State?
If one of your clients moves to a different state, you’ll need to determine whether you meet the rule for the de minimis exemption in that state. If not, you’ll need to update your registration status to determine whether additional registration or notice-filing requirements apply.
Bottom Line
Managing clients across different locations or states, or even across borders, becomes less complicated when you have the infrastructure in place to do so and you fully understand regulatory and compliance requirements. Along with tech tools, regular communication and consistent service can help make those clients feel valued and appreciated, to help maintain strong client relationships despite the distance.
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- Compliance software can help you streamline and automate operational tasks so you can focus on meeting the needs of your clients, regardless of their location. For example, you may use a software program to digitize new client onboarding and KYC checks, so that you have more time to focus on other tasks. Look for compliance programs that integrate seamlessly into the rest of your tech stack.
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Article Sources
All articles are reviewed and updated by SmartAsset’s fact-checkers for accuracy. Visit our Editorial Policy for more details on our overall journalistic standards.
- “State Investment Adviser Registration Information.” North American Securities Administrators Association, https://www.nasaa.org/industry-resources/investment-advisers/state-investment-adviser-registration-information/.
- Aligning Advisor Strategies with Evolving Client Preferences. Advisor – Client Communication Survey, YCharts, https://go.ycharts.com/hubfs/YCharts_Advisor_Client_Communication_Survey_2024.pdf.