How to Register With the SEC as an Investment Advisor

The Securities and Exchange Commission (SEC) is a federal agency responsible for overseeing key aspects of the investment industry. Its regulatory scope includes securities brokers and dealers, investment advisors, mutual funds and securities exchanges, among others. As stated by USA.gov, the SEC’s mission is to “promote fair dealing, the disclosure of important market information, and to prevent fraud.” Given this mandate, the SEC also regulates registered investment advisors (RIAs) — firms that assist clients in managing their investments. Registration requirements for investment advisors vary based on firm size and operational jurisdiction, with some firms being required to register with the SEC.

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Who Is Required to Register With the SEC?

The SEC specifies certain conditions under which an investment advisor must register, as outlined below. Investment advisors who do not meet these criteria are generally prohibited from registering with the SEC and must instead register with the relevant state securities authorities.

• Advisors with $110 million or more in assets under management (AUM) must register with the SEC.
• Advisors with $25 million or more in AUM may register with the SEC if their principal office and place of business is in a state that either exempts them from registration or requires registration but does not conduct examinations (currently, this applies only to New York).
• Advisors serving registered investment companies or business development companies are required to register with the SEC.
• Foreign investment advisors with $25 million or more in aggregate AUM attributable to at least 15 U.S. clients or investors in private funds must also register.
• Advisors eligible for SEC registration by rule or order may do so in accordance with applicable regulations.

Here are some notable exceptions to these guidelines:

• Firms that operate in 15 or more states must register with the SEC, even if they manage less than $100 million.
• Firms with between $90 million and $110 million can generally choose whether to register with the SEC or at the state level.
• Newly established firms that expect to have $100 million in AUM within 120 days of registering as an RIA must also do so with the SEC.
• Provide investment advice exclusively through an interactive website.

In general, individuals establishing an investment advisor do so by establishing an entity such as a corporation or limited liability company (LLC). However, it is possible that an individual can register with the SEC as a sole proprietor.

How to Register With the SEC as an Investment Advisor

Registering as an investment advisor with the SEC is a multi-step process with ongoing annual registration requirements. 

Keep in mind that in most cases, it’s the advisory firm itself that must register with the SEC, not the individual people who work with clients on behalf of the firm. These professionals, known as investment advisor representatives (IARs), may need to pass certain examinations like the Series 65 exam. 

Here are some of the main steps in the registration process:

1. Create an IARD account

The first step for registering as an SEC investment advisor is creating an Investment Advisor Registration Depository (IARD) account. The IARD is the online system RIAs use to file and update Form ADV. Members of the public can use this system to look up and research investment advisors registered with the SEC or state regulatory authorities. 

2. Submit Your Form ADV to the SEC

Using the IARD system, you’ll submit your initial Form ADV to apply for SEC registration. This form provides details about an investment advisor’s business, including ownership, clients, employees, business practices and disciplinary events. 

Form ADV Part I is a fill-in-the blank form that discloses basic information about the firm – how many clients it works with, where it’s located, assets under management and other details. Form ADV Part II is a narrative brochure that offers a more detailed description of the firm’s services, ownership, investment approach and conflicts of interest. 

The SEC charges an initial registration fee of $225 for firms with $100 million in AUM or more, $150 for firms with between $25 million and $100 million, and $40 for those with under $25 million in AUM. 

3. Wait for Registration Approval 

Within 45 days of registering, the SEC is required to approve the application for registration or begin proceedings for denying it. If the Form ADV was incomplete or submitted incorrectly, the SEC will give the firm an additional 45 days to resubmit its documentation.

4. Update Form ADV Annually 

The SEC requires firms to amend their Form ADV no later than 90 days after the end of each firm’s fiscal year, as well as during the year to reflect “material changes” as they occur. So for example, firms operating on a calendar year have until March 31 to amend their annual amendment. The SEC then charges its annual registration fees broken down by firm size, in the same amounts as mentioned earlier.

5. Maintain Your Books 

According to the Investment Advisers Act of 1940, investment advisors must maintain “true, accurate and current” books and records related to their investment advisory business.

Under Rule 204-2 of the law, investment advisors who are registered or required to register with the SEC must keep bank statements, bills and cash receipts, among other records. This includes “a memorandum of each order given by the investment adviser for the purchase or sale of any security.”

Building Marketing for Your Business After SEC Registration

Whether your firm is brand new or has been around for years, marketing can play a vital role in how you grow your business and build your brand. Registering with the SEC can be a good time to reevaluate your marketing strategy and put a plan into motion for expanding your client base. 

In fact, a 2024 Broadridge survey of over 400 financial advisors found that advisors with a “defined marketing strategy” generate 168% more leads per month and onboard 50% more clients per year. Yet, the same survey found that three out of 10 advisors spend less than an hour per week on their marketing efforts.

That’s where SmartAsset AMP can provide value. This end-to-end marketing solution can help fiduciary financial advisors automate their outreach and lead generation services, so they can focus growing their assets under management. The platform includes client referrals, live connections with leads, compliant automated texting outreach and email nurture campaigns to help close leads who require a longer sales process.

Advisors can choose from three different services options generating up to 120, 276 or 540 client referrals each year. Meanwhile, AMP’s Outreach Automation Tool can help advisors cut down on the time it takes to manually track leads and communicate with them automatically.

Benefits of Registering With the SEC

Becoming a registered investment advisor with the SEC offers several advantages. It enhances your firm’s credibility, provides access to valuable educational resources and ensures regulatory support.

One of the key benefits of SEC registration is the trust it fosters with potential clients. Investors can review a firm’s Form ADV to examine its regulatory history, past infractions, fee structures and other critical details. Additionally, SEC-registered advisors are held to a fiduciary standard, requiring them to always act in their clients’ best interests.

Registered advisors also gain access to the SEC’s Compliance Outreach Program, which offers essential compliance tools, including self-inspection checklists, educational materials and a quick-reference series on frequently addressed SEC compliance topics.

Bottom Line

Navigating the process of registering as an investment advisor with the SEC first requires an understanding of what constitutes a registered investment advisor (RIA) and whether it’s the SEC or state authority with whom to register. Firms that require SEC registration will need to create an IARD account, submit Form ADV, pay a registration fee and update their documentation on an annual basis. 

Tips for Expanding Your Advisory Business

• If you’re looking to scale your business but have limited time to devote to growth, consider automating your client outreach and lead generation efforts. SmartAsset AMP (Advisor Marketing Platform) is a holistic marketing service financial advisors can use for client lead generation and automated marketing. Sign up for a free demo to explore how SmartAsset AMP can help you expand your practice’s marketing operation. Get started today.
• Specializing in a specific demographic or financial need – such as retirees, business owners or young professionals – can differentiate you from competitors. A target market focus allows you to tailor your services and marketing efforts, making your value proposition clearer to potential clients in that segment.

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