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Guide to RIA Startup Costs


Starting a registered investment advisor firm can mark the beginning of a new phase in your career if you’re ready to go independent. Assessing RIA startup costs is a key step in the planning process. Understanding some of the most important expenses you’ll need to pay can help you shape your startup budget.

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Average Cost to Start an RIA

On average, an advisor may need to invest anywhere from $10,000 to $50,000 to start an RIA. The actual amount you’ll pay to launch an RIA is dependent on several variables, including your:

Can you start an RIA for under $10,000? It’s possible if you’re starting the business alone and keeping your operating costs lean. For example, you might market yourself as an online-only RIA or meet with clients in a home office, eliminating the need to lease commercial space.

When in doubt about how much to budget for RIA startup costs, it’s better to overestimate. If your expenses come out lower than you anticipated, you can use any surplus cash to invest in growth. It’s more difficult to produce extra funds to cover startup expenses if you’ve significantly underestimated your needs.

RIA Startup Costs By the Numbers

The easiest way to understand what it costs to start an RIA is to break expenses down by category. Here are some of the most common costs you can expect when going independent.

Exam Registration Fees ($80 – $300)

You’ll need to hold a series 65 license to register as an independent advisor representative and start an RIA firm. You may substitute a Series 7 and Series 66 license for Series 65 if you haven’t been affiliated with a broker-dealer in the previous 24 months.

Each of these securities licenses requires passing an exam. The Securities Industry Essentials (SIE) exam is a corequisite for the Series 7 exam.

Here are the fees you’ll pay to register for each one:

  • Securities Industry Essentials Exam: $80
  • Series 7: $300
  • Series 65: $187
  • Series 66: $177

Most states require registered advisors to take the Series 63 exam, as well. That exam has a fee of $147.

Note that these costs only apply to exam registration fees. You may incur additional expenses if you purchase study materials or exam prep courses.

Business Formation Expenses ($100 – $1,000)

You’ll need to form your business on paper when starting an RIA, and the cost can vary by state as well as your chosen structure. An RIA can be structured as a sole proprietorship, partnership, corporation or limited liability company (LLC).

Assuming you go the LLC route, you may pay a fee to:

  • File LLC paperwork
  • Publish notice of the business formation if required by your state
  • Designate a registered agent, if your state requires one
  • Register a “doing business as” (DBA) name
  • Obtain a business license

You’ll also need to get an Employer Identification Number (EIN) from the IRS. You can do this for free through the IRS website.

If you’re not comfortable drafting a business plan for your RIA yourself, you might hire a consultant to do that for you. That can add to your total cost.

RIA Registration ($40 – $225*)

You’ll need to register your RIA with the Securities and Exchange Commission (SEC) or your state agency. Which one you register with depends on your assets under management (AUM).

  • If your AUM exceeds $110 million, you must register with the SEC.
  • If your AUM is less than $100 million, you’d typically register with the state.
  • If your AUM is between $100 and $110 million, you can choose SEC or state registration.

If you’re eligible for SEC registration, you’ll need to complete Form ADV and file it through IARD, the Investment Advisor Registration Depository. SEC registration requires a fee, which is also determined by your AUM. The fee is:

  • $40 for firms with less than $25 million in AUM
  • $150 for firms with AUM between $25 million and $100 million
  • $225 for firms with AUM exceeding $100 million

State fees vary. In North Carolina for instance, investment advisor representatives are required to pay a registration fee of $75 for each advisor in the firm. In New York, the filing fee is $200.

Checking with your state’s regulatory authority can give you an idea of which fees you’ll need to pay to register and the amount.

Errors and Omissions Insurance/Surety Bond ($200 – $5,000)

If your state requires you to carry errors and omissions insurance and/or have a surety bond, you’ll need to factor those into your RIA startup costs budget.

Errors and omissions insurance is designed to protect your firm from liability claims centering on negligence or inadequately performed services. A surety bond is intended to ensure that you perform services as an investment advisor following the law.

Marketing and Advertising ($0 – $5,000)

The amount you’ll spend to promote your new RIA can depend on how you plan to market it.

If you’re bringing a book of business with you, then you might focus on generating referrals through your existing client base first before launching an official marketing campaign. On the other hand, if you’re starting an RIA with zero AUM, then you may need to go all in with your marketing budget to gain traction.

Your marketing budget may include expenses for:

  • Professional website hosting, design and setup
  • Search engine optimization (SEO) services
  • Logo and branding design
  • Business cards
  • Social media management services, if you don’t plan to do this yourself
  • Digital ads
  • Print advertisements or billboards
  • Direct mail marketing costs

If marketing feels overwhelming or you’d prefer to spend time serving your clients, you might outsource to a third-party platform. SmartAsset AMP, for instance, can match you with leads and provide you with automation tools to help you nurture new client relationships.

Technology ($0 – $10,000)

You'll want to factor technology solutions into your RIA startup costs.

Tech tools can make it easier to start and grow an RIA. If you’re working with a limited startup budget, it’s important to consider which ones make the most sense to add to your tech stack.

At a minimum, you’ll need:

  • A good customer relationship management (CRM) software
  • Accounting software
  • Financial planning and portfolio management software

You may invest in an email marketing service if you plan to begin building a newsletter from day one. Cloud storage tools can help you organize and manage files, while collaboration tools can make it easier to communicate with members of your team.

Compliance software is another smart investment. You’ll need to name a chief compliance officer (CCO) for your firm, and having compliance software can make their job easier.

In addition to software, you may need to purchase computers, printers or scanners to outfit your office space. If you’re starting an RIA with employees, you’ll need desks, chairs and basic supplies, as well.

Other RIA Startup Costs ($0 – $35,000)

There are other expenses that you might pay to start an RIA that don’t necessarily fit into any single category. These expenses can include:

  • Hiring and training employees
  • Employee payroll
  • Opening and maintaining a business bank account
  • Origination fees, interest and monthly payments if you plan to apply for business loans
  • Lease expenses if you’re renting a commercial space
  • Utilities
  • RIA custodian fees
  • Employee payroll
  • Attorney’s fees or consulting fees if you get outside help to launch your RIA firm

State-registered RIAs may be subject to net worth and net capital requirements. Each state has different thresholds, but typical requirements are $10,000 and $35,000, respectively. States may require a surety bond for advisors who are unable to meet these requirements.

Frequently Asked Questions (FAQs)

How Much Do You Need to Start an RIA?

The amount you need to start an RIA may range from $10,000 to $50,000 or more. Your initial startup costs can depend on your registration status, state business formation laws and your overall business plan.

What Is the Minimum AUM to Start an RIA?

Generally, there is no minimum AUM to start an RIA. You can start an RIA with $0 if necessary. Keep in mind, however, that some RIA custodians may impose a minimum AUM rule to accept your firm as a client.

Is Starting an RIA Worth It?

Starting an RIA can be worth it if you’re seeking greater freedom in the kind of client experience you offer. As an independent RIA, you control every aspect of the business. If you’re not ready to become fully independent yet, you might consider working with an RIA aggregator. RIA aggregators provide advisors with the tools they need to serve their clients without the responsibilities associated with running an independent business.

Bottom Line

An advisor starting an RIA, having kept in mind RIA startup costs.

Starting an RIA can be an exciting prospect, but it’s important to know what you might spend going in. Once you’ve launched, it’s helpful to review your budget regularly to assess cash flow and look for opportunities to reduce spending.

Tips for Growing Your Advisory Business

  • Marketing can take up a decent chunk of your RIA budget, and it’s to your advantage to ensure that your efforts produce results. Investing in an automated marketing service could make sense if you’d like to find new leads without typing up hours of your day. SmartAsset AMP helps match you with leads that fit your ideal client profile. You can nurture those leads using automated tools, while still having plenty of time to serve your clients. Get started today.
  • Once you know how much it will cost to start an RIA, the next step is figuring out how to pay for it. You might draw from your savings account if you’re able to do so, open a business credit card, or apply for a small business loan. If you’re considering financing your new business, take time to compare the options, including credit limits, repayment terms, fees and interest rates.

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