When to Switch Between State and SEC Registration

One of the most important regulatory decisions for a Registered Investment Adviser (RIA) is determining whether to register with the Securities and Exchange Commission (SEC) or with one or more state securities authorities. This registration status isn’t fixed — and understanding when to transition between state and SEC registration is essential for staying compliant.

🏛️ Overview: SEC vs. State Registration

- State Registration: Generally applies to smaller firms with less than $100 million in regulatory assets under management (RAUM), unless exempt.

- SEC Registration: Required for larger firms with $110 million or more in RAUM, or firms that meet certain exemptions (e.g., multi-state advisers or advisers to registered investment companies).

🔄 When to Transition from State to SEC Registration

You must switch to SEC registration when:

1. You Reach $110 Million RAUM

Once your firm crosses this threshold, you are required to register with the SEC within 90 days.

2. You Expect to Exceed $110 Million in 120 Days

If you reasonably expect your AUM to exceed $110 million within 120 days, you may register with the SEC in advance.

3. You Qualify for an Exemption

For example:

- Advisers required to register in 15 or more states

- Advisers to registered investment companies

- Internet advisers meeting specific criteria

🔁 When to Transition from SEC to State Registration

You must withdraw your SEC registration and switch to state registration when:

1. RAUM Falls Below $90 Million

If your firm’s RAUM drops below this threshold, you are generally required to transition to state-level registration unless an exemption applies.

2. You No Longer Qualify for an SEC Exemption

For instance, if you no longer advise a registered investment company or meet multi-state filing thresholds.

3. You Reorganize Your Business Model

Structural changes to your firm may trigger the need to reevaluate your registration status.

🗓️ Timing and Process

- Form ADV Amendment**: Update your Form ADV to reflect changes in AUM or business structure.

- Withdrawal and Refiling**: To withdraw from SEC registration, file a Form ADV-W and a new ADV with the appropriate states (or vice versa).

- Client Notice**: Notify clients of changes in your registration and regulatory oversight, especially if it affects their rights or disclosures.

⚠️ Tips for a Smooth Transition

- Monitor your AUM regularly (quarterly or more frequently).

- Work with compliance consultants to time the transition properly.

- Review registration exemptions carefully to avoid dual registration.

- Maintain thorough documentation to support any change in status.

Final Thoughts

Switching between SEC and state registration is a natural part of a growing or evolving advisory firm. By understanding the thresholds and planning ahead, advisers can ensure a seamless transition while maintaining full regulatory compliance.

Don’t wait until a regulator flags it — be proactive, informed, and ready to pivot when necessary.