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How to Start an RIA Without Any Assets Under Management (AUM)


Becoming an independent Registered Investment Advisor is an opportunity to strike out on your own and take control of your career. Ideally, you could do so with an established client base, but if you’re unable to transfer your book of business from your previous firm, you might be starting from scratch. Starting an RIA with no AUM can add an extra layer of difficulty to the process, but it’s not an impossible obstacle to overcome.

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What Is the Minimum AUM to Start an RIA?

There is no minimum amount of assets under management required to start an RIA firm. Assets under management do, however, influence where you register as an RIA.

  • RIAs with $110 million or more in AUM generally must register with the Securities and Exchange Commission (SEC).
  • Firms exceeding $100 million but with less than $110 million may register with the SEC.
  • RIAs with less than $100 million in AUM register with their state regulatory agency.

RIA custodians may have minimum AUM requirements they expect firms to meet. An RIA custodian is responsible for holding and maintaining the assets your firm manages.

Are there advantages to starting an RIA with AUM? Certainly. It may be easier to find a custodian who’s willing to work with you when you already have assets under management. Your existing client base could also be a source of referral traffic, which could make it easier to scale.

Again, however, AUM is not a requirement for going independent as an RIA.

How to Start an RIA With No AUM

A financial advisor starting an RIA with no AUM.

Starting an RIA with no AUM is a process, and there’s a certain degree of planning required. Mapping out your strategy beforehand can increase your chances of success.

Estimate Startup Costs

Creating an RIA startup budget allows you to plan for initial as well as ongoing costs as you work on finding clients. It’s possible to start a small RIA firm with $10,000 or less if you’re keeping the budget lean, but actual costs can vary.

Some of the most common expenses you may need to budget for include:

  • State registration filing fees
  • Business formation fees
  • Exam fees if you have not yet completed the Series 65 exam
  • Minimum deposit requirements to open a business bank account
  • CRM and accounting software
  • Website domain and hosting
  • Business cards
  • Professional logo design or website design
  • Custodian fees
  • Errors & omissions insurance
  • Email marketing services
  • Lead generation services
  • Portfolio analytics and financial planning software
  • Compliance software
  • Compliance consultant services
  • Surety bond, if required
  • Rent and utilities if you’re leasing office space
  • Office furnishings and supplies

As your firm grows, you may need to expand your budget to include employee payroll and benefits.

If you have a limited budget or want to keep costs as low as possible until you begin working with clients, you may need to prioritize what’s most important. For instance, having a professional website is important for gaining a foothold in local searches, but a basic design may serve your needs until you can afford to invest in professional web development services.

Determine Your Services and Fees

You’ll need to decide what services you plan to offer and what to charge your clients. If you’re unsure who your target clients are, it’s important to give that some thought first.

Specifically, consider:

  • Your ideal client’s demographic background
  • How much assets those clients are likely to bring into your firm
  • The problems or pain points you’re equipped to help them solve

The type of clients you’re hoping to work with can influence your fee structure.

For example, say that you’re interested in working with HENRY individuals (high earners, not rich yet). These clients may have little in terms of investable assets to speak of, at least for the present.

You might consider forgoing the traditional fee structure that dictates charging a percentage of AUM and charging a flat fee or hourly fee instead. Or you might use a tiered fee structure to determine what to charge.

That kind of approach could make it easier to attract clients who need the help of a financial advisor but don’t meet a minimum AUM threshold to work with one. That’s one of the chief benefits of starting an RIA; even if you’re doing it from zero, you have flexibility in deciding how to best serve your clients.

Complete State Registration

Since you’re starting an RIA with no AUM, you’ll register with your state, not the SEC. You’ll need to file Form ADV Parts 1 and 2 through the Investment Adviser Registration Depository (IARD). Part 1 requires information about your business, including its:

  • Ownership
  • Clients
  • Employees
  • Business practices
  • Affiliations
  • Disciplinary history

Part 2, the brochure, is where you’ll explain your business practices, including the fees you charge and any potential conflicts of interest. If you have any prior disciplinary actions on your record, you will explain those here, as well.

There’s also a Part 3 to Form ADV, which is the relationship summary. This summary should briefly explain the types of services you plan to offer, the fees and costs your clients will pay, the required standard of conduct you follow, potential conflicts of interest, and prior disciplinary history, if any.

You may need to file Form U4 to show that you’ve completed the requirements for registration. Whether you need to file depends on where you register.

For example, if you’re planning to register in Texas, Form U4 is required. Additionally, you must be able to demonstrate solvency, though a surety bond is not required. Ohio doesn’t require sole proprietors to pay an IAR fee or file Form U4, but you must have passed the Series 65 exam, or the Series 7 and Series 66 exams.

It’s wise to check with your state’s regulatory agency to find out what forms and fees are required when starting an RIA with no AUM or clients.

Research RIA Custodians

You’ll need to choose an RIA custodian to hold client assets once you have some to manage. While many custodians expect you to have $10 million, $50 million, or $100 million in assets under management, it’s possible to find platforms that have no minimum AUM requirement.

As you compare them, consider the following:

  • What range of services do they offer?
  • How much will the custodian charge?
  • How easily does the custodian’s software integrate with the rest of your RIA tech stack?
  • Is there a user-friendly client portal or dashboard?
  • Does the custodian provide you with helpful tools, such as visualizer tools or model portfolio builders that you can use to serve your clients?
  • What type of support does the platform offer?

Cost is likely to be a central concern if you’re starting an RIA with no AUM, but it’s important to consider what you’re getting in return. A custodian that’s willing to accept you with no assets under management and offers a comprehensive range of features and benefits may be worth paying a slightly higher fee for if you’re able to leverage those features to scale your business.

Develop Your Marketing Strategy

Marketing is essential to the success of any advisor, but it can be particularly important if you’re going independent with no clients. You’ll need to decide how much you want to invest in marketing and which channels or promotional strategies are likely to produce solid results.

Your marketing plan might include:

  • Social media promotion
  • Digital ad campaigns
  • Direct mail marketing
  • Email marketing
  • Search engine optimization to drive traffic to your website
  • Local advertising, including newspaper ads or billboards

If you’re interested in generating leads online but don’t have time to test different marketing strategies, you might consider a third-party solution. Working with an advisor marketing platform can help you get your business in front of your target client base while leaving you free to manage other tasks.

Frequently Asked Questions

How Much Do You Need to Start an RIA?

Startup costs for an RIA can vary based on your business model, location and expected expenses. It’s reasonable to expect launching an RIA to cost around $10,000, though it’s possible to do it for less. However, you could easily spend more than that if you’re hiring employees, investing heavily in marketing, or paying to lease office space and equipment.

What Are the Minimum Capital Requirements for RIAs?

States may impose requirements regarding solvency and the amount of capital investment advisers are expected to maintain in reserves. In California, for example, investment advisers who do not have custody of client funds or securities, but maintain discretionary authority over them, must have a minimum net worth of $10,000 at all times.

What Is the Best Custodian When Starting an RIA With No AUM?

The best custodian, if you have no AUM when starting an RIA, is one who is willing to work with you and offers the services you need at a price point that’s affordable. As your firm grows, you may decide to move to a different custodian that caters to RIAs with more assets under management.

Bottom Line

A financial advisor adding new clients to their RIA.

Can you start an RIA with no assets under management or clients? Yes, though you might face a steeper learning curve. In the long run, however, the benefits of going independent may outweigh any initial challenges you face.

Tips for Growing Your Advisory Business

  • Financial advisor marketing often requires some experimentation to figure out what works for your firm and what doesn’t. Partnering with an established advisor marketing platform can save you time, money and frustration if you’re not yet getting the results you desire. SmartAsset AMP can help you connect with qualified leads without taking time away from your busy daily routine. Sign up for a free demo to explore how SmartAsset AMP can help you expand your practice’s marketing operation. Get started today.
  • If your efforts to grow your firm pay off and your AUM grows to $110 million or more, you’ll need to register with the SEC. Switching from state to SEC registration involves additional paperwork and fees. You may want to consult an attorney or RIA compliance specialists to ensure that you’re completing the required steps.

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