Understanding State Requirements: Annual Financial Statement Filings for Registered Investment Advisers

As a registered investment adviser (RIA), regulatory compliance is essential — and that includes meeting annual financial reporting obligations. While SEC-registered advisers face minimal annual financial statement filing requirements, many state-registered investment advisers (state RIAs) are subject to much stricter rules. In fact, numerous state securities regulators require RIAs to submit annual financial statements such as balance sheets and income/expense statements.

Failing to comply with state-level filing requirements can result in penalties, registration issues, and unnecessary regulatory scrutiny.

Why Do States Require Financial Statements?

State securities regulators use financial statements to monitor the financial condition of registered advisers. These filings help ensure firms meet minimum financial requirements and are financially sound enough to operate ethically and responsibly.

States often require financial statements annually — especially from advisers that:

• Maintain custody of client assets.

• Have discretionary authority over client accounts.

• Pre-bill clients more than $500 for services rendered 6 or more months in advance.

Which States Require Annual Financial Statements?

Some states mandate annual filings from all state RIAs, while others require filings only from advisers with custody, discretionary authority, or prepayment arrangements. Here’s a high-level summary of states with annual requirements:

• Universal or Broad Requirements: Arkansas, California, Florida, Hawaii, Louisiana, Nebraska, New Hampshire, New York, Oregon, Washington, West Virginia.

• Conditional (Custody/Discretion Triggers Filing): Michigan, Minnesota, New Jersey, North Carolina, Pennsylvania, Tennessee, Utah.

• Special Notes: States like Oregon and Nebraska provide state-specific templates or alternative unaudited options depending on custody status.

What Must Be Filed?

Generally, states require:

• Balance Sheet

• Income and Expense Statement (Profit and Loss Statement)

• Net Capital Computation (if required by state law)

• Auditor’s Report (if custody triggers audited requirement)

• Management Certification (if unaudited)

How and When to File?

States typically require submission:

• Annually

• Within 90 to 135 days after fiscal year-end (most within 90 days)

• Via email, mail, or state-specific online portals (varies by state)

Key Takeaways for RIAs

• Do not assume SEC rules apply if you are state-registered — state rules can be much stricter.

• Custody, discretionary authority, and prepaid fees are common triggers for annual filing requirements.

• Maintain GAAP-based financial records and be prepared to produce audited statements if required.

• Stay informed about each state’s nuances and submission protocols to avoid compliance gaps.

Final Thoughts

Annual financial statement filing requirements can vary widely from state to state. RIAs should regularly review their obligations in each jurisdiction where they are registered and consider partnering with compliance professionals to stay on track.

Compliance is not optional — proactive adherence protects your business and clients.