How To Start An RIA: Step-by-Step Guide, Costs & Legal Considerations

Quick Summary: Starting an RIA requires passing the Series 65 exam, forming a corporate legal entity (typically an LLC or S-Corp), filing Form ADV Part 1 & 2, creating a comprehensive compliance program (Written Supervisory Procedures), and selecting an institutional custodian. To mitigate litigation risk under restrictive covenants and non-solicit agreements, breakaways should carefully navigate the Broker Protocol boundaries and monitor post-resignation Form U5 language via unified transition counsel.

Starting a registered investment advisor (RIA) firm is the ultimate move toward professional independence. However, for most advisors, the how-to of registration is not the hard part. The real challenge is surviving the transition without a lawsuit or a regulatory black eye.

Most consulting firms help you file paperwork. Most law firms help you with a lawsuit. AdvisorLaw is the only partner that does both: simultaneously building your new firm, while proactively defending you from the one you are leaving.

1. The Legal Reality: Survival Before The Launch

• Non-Solicit Agreements: These often prevent you from reaching out to clients. However, they rarely prevent clients from following you if they find you on their own.
• The Broker Protocol: If your firm is a member, you have a safe harbor to take limited client data (name, address, phone, email, and account title). If your firm is not a member, or if you take a single piece of unauthorized data, you are at high risk for a temporary restraining order (TRO).

Registration Threshold Summary: Generally, advisory firms with under $100 million in Regulatory Assets Under Management (RAUM) must register with their respective state regulatory authority. Firms managing $100 million or more qualify for federal registration directly with the Securities and Exchange Commission (SEC).

1. Define Your Business Model: Will you be fee-only or fee-based? Will you charge a percentage of AUM, flat fees, or hourly rates?
2. Form Your Legal Entity: This is usually an LLC or S-Corp, which provides the liability shield necessary for any business owner.
3. The Series 65 Requirement: Unless you hold a CFP®, CFA, or similar professional designation, you (and your IARs) likely need to pass the Series 65 exam.
4. Initial Filing (Form ADV): This is your firm’s brochure. It must disclose your fees, investment strategies, and any conflicts of interest. Note: mistakes here are the primary cause of registration delays.
5. Develop Your Compliance Program: This includes your written supervisory procedures (WSPs), code of ethics, and privacy policy.
6. Select A Custodian: You need a place to hold client assets, such as Schwab, Fidelity, or Pershing. Most require your RIA to be approved before you can initiate transfers.
7. Build Your Tech Stack: At minimum, you need a CRM, financial planning software, and a portfolio management system.
8. The Launch & ACAT Shuffle: This is the high-intensity window where you have resigned and must move assets quickly and compliantly.