SEC Registration Requirements for Investment Advisers

The Investment Advisers Act of 1940 requires investment advisers to register with the SEC or state regulators, depending on their assets under management and client type. Understanding the registration thresholds, exemptions, and ongoing obligations is essential for any investment management firm.

Who Must Register?

The Investment Advisers Act defines an investment adviser broadly: any person who, for compensation, engages in the business of advising others about securities. This covers a wide range of firms — from large institutional asset managers to small registered investment advisers (RIAs) serving individual clients.

The key question is whether to register with the SEC or state regulators. The answer depends primarily on assets under management (AUM), though other factors — client type, business model, and state of principal office — also matter.

Registration Thresholds

SEC Registration Required

$110M+ AUM

Must register with SEC. Subject to SEC examination and full Advisers Act requirements.

Mid-Sized Adviser (State)

$25M–$110M AUM

Generally must register with state regulators, not SEC. Some exceptions apply.

Small Adviser (State)

Under $25M AUM

Exempt Reporting Adviser (ERA)

Varies

Private fund advisers with under $150M in private fund AUM may qualify for ERA status — file reports but not full registration.

Form ADV: The Registration Document

SEC-registered advisers must file Form ADV, which has two parts. Part 1 contains information about the adviser's business, ownership, clients, employees, and disciplinary history — it's filed electronically through the IARD system and is publicly available on the SEC's Investment Adviser Public Disclosure (IAPD) website.

Part 2 (the "brochure") is a narrative document that describes the adviser's services, fees, investment strategies, risks, and conflicts of interest in plain English. It must be delivered to clients and updated annually. Part 2B covers individual supervised persons who provide investment advice.

Ongoing Compliance Obligations

Registration is not a one-time event — it triggers ongoing compliance obligations. SEC-registered advisers must: maintain a written compliance program with a designated Chief Compliance Officer (CCO); adopt a code of ethics governing personal trading; maintain books and records for specified periods; and submit to periodic SEC examinations.

The SEC's examination program (OCIE) conducts risk-based examinations of registered advisers. First-time registrants are typically examined within the first three years. Examinations focus on fiduciary duty, conflicts of interest, fees, custody of client assets, and marketing practices.

Private Fund Adviser Exemptions

Advisers to private funds (hedge funds, private equity funds) may qualify for the Exempt Reporting Adviser (ERA) exemption if they advise only private funds and have less than $150 million in private fund AUM in the US. ERAs must file a truncated Form ADV but are not subject to full registration requirements. Advisers with more than $150M in private fund AUM must register with the SEC.