SEC or State? The RIA Registration Path That Gates Every Breakaway Launch Date
A new RIA cannot open custodial accounts or submit ACATS transfers until its registration is effective. The SEC must act within 45 days of filing. State reviews run 30 to 45 days for a first pass, longer with a deficiency letter. Your regulatory AUM decides which path you file.
Ask a breakaway advisor when their transition starts and most say resignation day. Ask their operations lead and you get a different answer, because the operations lead knows the accounts cannot move until there is a registered entity to move them into, and that entity's registration is not something anyone on the transition team controls.
The registration path you file determines your earliest possible launch date. Get it wrong and you can lose six weeks in the worst possible window, the one where clients are sitting with your former firm and nobody is repapering anything.
Which regulator you file with is not a preference
Regulatory assets under management, or RAUM, decide the path. RAUM is not the same as the AUM number on your pitch deck. Form ADV defines it as the securities portfolios for which you provide continuous and regular supervisory or management services, which means it includes assets you might exclude from a marketing figure and excludes some you would include.
The thresholds work as a set of bands rather than a single line:
| Year-end RAUM | Registration path | Notes |
|---|---|---|
| Under $100 million | State registration | File in your home state, plus any state where you exceed the de minimis client count |
| $100 million to $110 million | Optional buffer | You may register with the SEC but are not required to. Many firms stay state-registered |
| $110 million and above | SEC registration required | Federal registration preempts most state registration requirements |
| SEC-registered, falls below $100 million | May stay SEC-registered | No need to deregister while RAUM remains at or above $90 million |
| SEC-registered, falls below $90 million | Withdraw to state | File Form ADV-W within 180 days of fiscal year end |
The buffer bands exist so firms hovering near a threshold do not bounce between regulators every year. Rule 203A-1(b)(1) ties the switching requirement to the filing of your annual updating amendment, and a state-registered firm reporting $100 million or more has 90 days from that filing to apply for SEC registration.
For a breakaway, the practical read is simple. An advisor moving a $250 million book is on the SEC path and has no choice about it. An advisor moving $60 million is on the state path and should plan for state timelines, which are less predictable. Both need to know which one applies before anyone books a resignation date. InnReg's overview of investment adviser regulation covers the threshold mechanics in more depth if you are close to a boundary.
The two clocks run at different speeds
This is where launch plans go wrong. Teams assume registration is a formality that runs in parallel with everything else. It is a gate, and the two paths gate differently.
The SEC path has a statutory ceiling. The SEC has up to 45 days from the filing date to grant or deny the application. That is a real outer bound, not an estimate, and many applications clear faster. It gives you something rare in a transition: a date you can plan against with confidence.
The state path has no equivalent ceiling. Most state securities divisions complete a first review in 30 to 45 days, but that varies by state, by season, and by application volume. If the examiner finds gaps, you receive a deficiency letter and the clock effectively pauses until you respond. SimplyRIA's registration timeline breakdown puts the full range at 30 to 90 days and identifies deficiency response speed as the single biggest factor separating a 45-day approval from a 90-day one.
That asymmetry has a direct operational consequence. On the SEC path you can build a launch plan around a known worst case. On the state path you should build one around a range and hold your client communication sequence flexible, because promising clients a date you do not control is how transitions lose trust in week three.
| Dimension | SEC path | State path |
|---|---|---|
| Review ceiling | 45 days, statutory | None. Typically 30 to 45 days first pass |
| Predictability for planning | High | Moderate to low, varies by state and season |
| Main delay driver | Follow-up questions on Form ADV | Deficiency letters and response turnaround |
| Multi-state footprint | Notice filings, generally lighter | Separate registration per state above de minimis |
| Who it fits | Books above $110 million RAUM | Books under $100 million RAUM |
What you actually file, and where the preparation time hides
Filing happens electronically through IARD. The application itself is Form ADV, and the two parts do different jobs:
- Part 1A is the structured application: business details, ownership, client types, custody arrangements, and disciplinary history.
- Part 2A is the narrative brochure: services, fees, investment strategies, and conflicts of interest, written in plain English for clients.
Most teams underestimate Part 2A. Part 1A is largely data entry once you have your entity and structure settled. Part 2A is a drafting exercise that examiners read closely, and a vague or boilerplate brochure is a common source of deficiency letters on the state path.
Ahead of filing sits the work that does not appear on any regulatory clock: entity formation, exams if you need them, the compliance manual, the code of ethics, and the advisory agreement. Budget two to three weeks for that block, and understand it is entirely within your control. Every day you compress there is a day off the front of the transition. XY Planning Network's registration guide is a reasonable checklist for that preparation phase.
The notice-filing trap nobody plans for
SEC registration preempts state registration, which advisors often hear as "I only deal with the SEC now." That is not correct, and it bites during a transition specifically because a moving book is usually spread across more states than the advisor realizes.
Most states exempt an SEC-registered adviser from notice filing when the adviser has no place of business in that state and had fewer than six clients resident there in the preceding twelve months. Several states do not follow that pattern. Beach Street Legal's breakdown of notice-filing logistics identifies Texas, Louisiana, New Hampshire, and Nebraska as states requiring notice filing regardless of the de minimis count, with Texas triggering on a single client and New Hampshire stating plainly that no de minimis exception applies.
Run this before you file, not after:
- Pull a client-count-by-state list from your household data.
- Flag every state where you will exceed five resident clients.
- Add the four states above regardless of count.
- Flag any state where you will have a physical place of business.
- Confirm investment adviser representative registration requirements separately, because they do not always follow the firm's notice-filing status.
A missed notice filing rarely stops a transfer on day one. It surfaces later as a regulatory cleanup item during exactly the period when your ops team has no spare capacity.
How to stage the transition while the clock runs
The registration window is dead time only if you let it be. The work that determines your NIGO rate in week five can almost all be done in week one, before the entity is effective.
Do during the registration window:
- Collect and normalize statement data for every household. Statements are the source of most repapering errors, and extracting positions, registrations, and tax IDs early means your account forms are already staged. This is the highest-return pre-work available, and it is why AI document intelligence belongs at the front of a transition rather than the middle.
- Build the household-level account inventory: registration type, tax ID, custodian, asset types, and anything that will not move through ACATS.
- Identify the registrations that will break: trusts, entities, and accounts touched by a life event.
- Complete custodian onboarding paperwork to the extent the custodian will accept it pre-effective. Ask early, because custodians differ on what they will take before registration is live.
- Draft the client communication sequence with a placeholder date, not a promised one.
Cannot do until registration is effective:
- Open custodial accounts in the new firm's name.
- Submit ACATS transfers.
- Execute advisory agreements as the new adviser.
The sequencing point matters more than any single item. Teams that treat registration as a waiting period arrive at effectiveness with nothing staged and then try to do statement extraction, form population, and submission all at once, which is precisely the pattern that produces reject clusters. Teams that treat it as a preparation window arrive with validated forms ready to submit on day one. The advisor transition platform case for this is entirely about that shift: moving work earlier in the timeline rather than doing the same work faster.
Note that registration effectiveness is a separate gate from the U4 and U5 sequence if any part of your move involves broker-dealer registration. They interact, and the later of the two governs. We covered that interaction in detail in the U4 and U5 registration sequence and your repapering clock.
The order of operations that avoids a registration gap
One rule overrides everything else in this article: never withdraw from your existing registration until the new registration is confirmed effective. A gap between the two is a regulatory problem that is far more expensive than a few extra weeks of overlap.
For advisors already operating a state-registered RIA and crossing into SEC territory, that means filing the SEC application and waiting for it to be granted before filing to withdraw at the state level. The 90-day and 180-day windows in the rules give you room to do this in the correct order. Use it.
For a breakaway leaving a wirehouse, the equivalent is confirming your new RIA's effective date before your resignation date is locked, or at minimum before your client communication goes out. Consultants running several of these at once tend to build the whole plan backward from the registration date for exactly this reason, which is the approach we see across the transition consultants we work with.
What a realistic plan looks like
Working backward from a target first-ACATS-submission date:
| Phase | Duration | Runs in parallel with |
|---|---|---|
| Entity formation, exams, compliance documents, Part 2A drafting | 2 to 3 weeks | Statement collection, household inventory |
| Form ADV filed via IARD | Same day | Custodian onboarding paperwork |
| Regulatory review | Up to 45 days (SEC) or 30 to 90 days (state) | Form pre-population, exception triage, communication drafting |
| Registration effective | Gate | Nothing. This is the gate |
| Custodial accounts opened, ACATS submitted | Days | Client outreach begins |
The registration review is the longest single block and the one you control least. Everything you can move to the left of it, you should. A transition that reaches effectiveness with clean, validated, pre-populated forms behaves completely differently from one that reaches effectiveness with a box of statements. Our advisor transition case study walks through what that difference looks like on a real book.
Frequently asked questions
Does my new RIA need to be registered before I can open custodial accounts?
Yes. Custodians open accounts for a registered advisory firm, so the registration must be effective first. This is the reason registration sits on the critical path of a breakaway rather than beside it, and why the launch date is set by the regulator rather than by the resignation date.
How long does SEC registration take for a new RIA?
The SEC has up to 45 days from the filing date to grant or deny an application, and many are granted sooner. That statutory ceiling is what makes the SEC path more plannable than the state path, where no equivalent deadline applies.
I manage $95 million. Do I file with the SEC or my state?
Under $100 million in regulatory AUM you file with your state. Between $100 million and $110 million you may register with the SEC but are not required to. At $110 million and above, SEC registration is required. Note that this is measured on regulatory AUM as Form ADV defines it, not the AUM figure you use in marketing.
Can I do repapering work before my registration is effective?
You can do most of the preparation. Statement extraction, household and account inventory, form population, and exception identification can all happen during the review window. What you cannot do is open accounts, submit ACATS transfers, or execute advisory agreements as the new adviser.
Do I still deal with states if I register with the SEC?
Yes, through notice filings. Most states exempt you if you have no place of business there and fewer than six resident clients, but Texas, Louisiana, New Hampshire, and Nebraska require a notice filing regardless of client count. Run a client-count-by-state report before you file, not after.
