How to Set Up an RIA: SEC vs State Registration, Costs & Compliance

$100 million in assets under management is the line that decides whether your RIA registers with the SEC or with your state — 16,544 firms sit above it, 16,575 sit below it, per 2025 IAA and NASAA data. That's the short answer. The longer answer is that most of the real cost and time isn't the registration filing itself — it's the compliance infrastructure you have to build before you file.

I've watched founders-turned-angels and family offices go through this exact decision as they cross from managing their own money to advising others. The paperwork is the easy part. Here's the full breakdown of SEC vs state registration, what it actually costs in 2026, and how long the process really takes.

How to set up an RIA: SEC vs state registration

To set up an RIA, you form a legal entity, pass the Series 65 exam (or hold an equivalent credential), draft a compliance manual, and file Form ADV with either the SEC or your state regulator based on assets under management. Firms managing $100 million or more in regulatory assets under management register federally with the SEC; firms below that threshold register with their home state instead, a split established by the 2011 Dodd-Frank threshold change.

That $100M line isn't arbitrary — it's a hard statutory dividing point, and there's a buffer zone between $90M and $110M where a firm can choose either path before being forced to switch. Below $90M you must register at the state level; above $110M you must register with the SEC. Everything else in this guide — cost, timeline, exam requirements — flows from which side of that line your firm sits on.

SEC registration vs state registration: the direct comparison

The two paths share a filing system (Form ADV through the IARD) but diverge sharply on cost, oversight, and speed. Here's the side-by-side.

Figures are 2025-2026 estimates blended from IAA Industry Snapshot, NASAA 2025 Annual Report on state-registered advisers, SEC Form ADV instructions, and IARD fee schedules. Filing fees and exam windows vary by state and adviser type.

What does it cost to set up an RIA in 2026?

Total startup cost runs $10,000 to $50,000, depending heavily on whether you hire a compliance consultant or build the manual yourself. The single biggest line item is compliance consulting, which typically runs $8,000 or more for a first-time filer — most founders find this is the one place not to cut corners, since a deficient compliance manual is the most common reason a first Form ADV filing bounces back with comments.

Beyond the one-time setup, ongoing annual costs (E&O insurance, technology, continuing compliance) run roughly $6,000-$15,000/year for a solo practitioner before you add any staff. That recurring cost is why most advisers don't go independent until their book of business can cover it comfortably — a dynamic similar to the AUM breakeven we cover in our family office setup guide.

How long does RIA registration actually take?

Budget 2-4 months from the day you start entity formation to the day your Form ADV is approved. SEC review takes roughly 45 days by statute once a complete application is filed, while state-level review ranges 30-90 days depending on the state — Texas and California tend to move faster than smaller states with less-staffed securities divisions.

The sequence that actually eats the calendar: (1) form your LLC or corporation, 1-2 weeks; (2) pass the Series 65 exam, which requires a minimum 4-6 week study window for most candidates; (3) draft your compliance manual, Form ADV Parts 1 and 2, and your written supervisory procedures, 3-6 weeks if using a consultant; (4) submit through IARD and respond to any regulator comments, 4-12 weeks depending on jurisdiction.

Founders who start the Series 65 study process in parallel with entity formation — instead of sequentially — routinely shave 4-6 weeks off the total timeline. That single scheduling decision is the highest-leverage move in the entire process.

RIA registration requirements: the compliance checklist

Beyond the AUM threshold, here's what regulators actually require before approving your filing.

What happens after you cross $100 million?

Once your regulatory assets under management cross $110 million, you're required to switch from state to SEC registration — a process called "switching," which requires filing an amended Form ADV and de-registering from your state within 90 days of your fiscal year-end. This isn't optional: staying state-registered above the threshold is itself a compliance violation.

The switch usually coincides with meaningfully higher compliance overhead — SEC-registered advisers face the possibility of a routine examination roughly once every six years on average (more frequently for larger or higher-risk firms), versus far less predictable state exam cadences. Many advisers that cross the threshold also add a dedicated Chief Compliance Officer at this stage rather than continuing to wear that hat themselves. If you're structuring for scale, our VC Fund Performance Dashboard tracks how fund managers at comparable AUM tiers structure their own registration and reporting obligations.

Should you become an RIA or join one as an IAR?

Not everyone who passes the Series 65 needs to start their own registered entity. Becoming an investment adviser representative (IAR) at an existing RIA sidesteps the $10,000-$50,000 startup cost, the compliance manual, and the 2-4 month registration wait entirely — you're covered under the host firm's registration the day you're onboarded. NASAA's 2025 data counted 47,263 investment adviser representatives operating under state-registered firms alone, a population roughly three times larger than the 16,575 firms themselves, which tells you most advisers choose the IAR path over founding their own RIA.

The tradeoff is control and economics. An IAR typically keeps 40-80% of the fees they generate depending on the host platform's payout grid, while an RIA owner keeps effectively 100% of revenue minus the $6,000-$15,000/year in fixed compliance overhead — but also owns 100% of the liability, the client relationships, and the regulatory exam risk. The breakeven for most solo advisers sits around $15-25 million in fee-generating AUM at a typical 1% fee, which produces enough revenue to comfortably absorb the fixed cost of running your own registered entity rather than splitting revenue with a host firm.

Founders coming out of a liquidity event who want to manage money for a handful of former colleagues or LPs often default to starting their own RIA because they assume that's the only structure available — when in practice, becoming an IAR at an established multi-family-office platform gets them live in weeks instead of months, with none of the Form ADV drafting risk described above. It's worth running both paths past a compliance consultant before committing capital to either one.

The Bottom Line

Setting up an RIA is a 2-4 month process that costs $10,000-$50,000 upfront and splits into two tracks at the $100 million AUM line: state registration below it, SEC registration above it. As of 2025, 16,544 firms sit on the SEC side and 16,575 sit on the state side — almost an even split, which tells you the threshold is doing exactly what it was designed to do. The paperwork is mechanical. The part that actually determines whether your filing sails through or bounces back is the compliance manual — get that right, hire a consultant if you can afford the $8,000+, and the rest of the process is just waiting.