Year-End Requirements for RIAs

Dec. 22, 2017

Here we are at the end of another year.  For registered investment advisers (RIAs), this can be an extremely busy time as clients flood inboxes and voicemails with year-end requests.  Adding to that stress, RIAs must also be cognizant of year-end requirements related to maintaining their registration to do business.

Here are a few quick reminders of what RIAs must do to properly renew and maintain their registration as we ring in the new year. 

1.    Ensure you have adequate funds in your CRD/IARD account

Investment adviser registration records are maintained through the IARD system.  In most cases, an RIA’s registration (and those of its representatives) is automatically renewed, so long as the RIA has an “approved” IARD registration status and has adequate funds in its CRD/IARD account to pay all applicable renewal fees ($100 for RIAs and $50 for each investment adviser representative in Minnesota).  If the RIA does not have sufficient funds, however, its registration will lapse until the RIA replenishes funds and proactively contacts regulators where the RIA was registered.  You don’t want to find yourself in that position! (Additional resources on maintaining registrations through the IARD system are available here.)

2.    File any pending Forms U5 or Forms ADV-W timely to avoid being charged unnecessarily

If you have recently terminated a registered representative, or if you would like to withdraw registration of your firm in any jurisdiction, file Forms U5 and/or a Form ADV-W as soon as possible.  If you are automatically charged renewal fees for 2018 registrations, those fees may be reimbursable if you file a Form U5 or Form ADV-W by December 26th.  

3.    Review and update your Form ADV Part I

In the first quarter of each year, RIAs must file an updating amendment to their Form ADV.  The 2018 renewal cycle will mark the first time most RIAs will need to use an updated Form ADV to make their amendments.  Therefore, it will be important for RIAs to allow themselves extra time to file updating amendments by March 31st.  The SEC published a summary of differences between the old and new Forms ADV here.

4.    Review and update your Form ADV Part II (client brochure)

Along with Form ADV Part 1, RIAs must also update their client brochure on an annual basis.  Within 120 days of the end of the RIA’s fiscal year, the RIA must provide an updated brochure to each client.  Alternatively, the RIA may provide the client with a summary of material changes to its previous brochure that includes an offer to provide a copy of the brochure to the client, or information on where the client can access the updated brochure.  If the RIA does not have any material changes to report, it is not required to send an update to clients.  However, it is good practice to file a re-dated brochure with its annual amendment to confirm to regulators that the RIA has reviewed the brochure on a yearly basis.

Written By:
Brian Edstrom

Brian Edstrom is a Shareholder and Attorney at Avisen Legal, P.A. He brings to Avisen clients the ability to “speak regulator,” having spent several years working for federal and state regulators in Washington D.C. and Saint Paul, MN before entering private practice. Brian assists clients in all aspects of working with securities regulators, whether it be to obtain a license or registration, prepare for an audit, or respond to an enforcement investigation.  Brian also regularly advises clients on their general business needs, particularly surrounding raising money through securities offerings.

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