Starting an RIA in Delaware requires specific guidelines to be met. This article will explain what advisors need to know before starting their firm.
Advisors living in Delaware, advising Delaware residents, or marketing their services in Delaware must register with the state.
Hiring a compliance consultant can make this process easier.
Delaware requires the following:
Advisors must have one of the following professional designations to operate in Delaware: Series 65, Series 66 and Series 7, CFP, CFA, CIC, ChFC, or PFS.
To register an RIA in Delaware, IARs must pay filing fees. Additionally, they must complete the following tasks and submissions with the state:
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Submit FINRA Entitlement Paperwork
For an IAR to file a registered investment advisor application in Delaware, they have to apply to FINRA and create an account for FINRA’s WebCRD/IARD online system. It should be noted that FINRA doesn’t regulate or supervise RIAs, but Delaware uses FINRA’s system to process RIA applications. -
Form ADV Part 1 (online portion)
Form ADV Part 1 is all about the RIA only and is the online component of the firm’s application. In Form ADV Part 1, the advisor will share all the information related to the firm, such as ownership, business practices, clients, disciplinary events related to the advisor or its employees, and any affiliations.
ADV Part 1 is also used to upload ADV Part 2A and ADV Part 2B. -
Form ADV Part 2A (paper and online)
Form ADV Part 2A acts as the RIA’s disclosure brochure. In this brochure, an advisor will share information about the RIA’s fees, services, disciplinary disclosures, and anything related to the firm that clients should know.
Delaware requires that Form ADV Part 2A be given to prospective and current clients, and it must be easy to read and understand. -
Form ADV Part 2B (paper and online)
This is another paper brochure that most times is given to clients. This brochure will have details about the advisor, including their education, employment history, potential conflicts of interest, and any disciplinary actions. Also, any Executive Officers or representatives who advise clients will need to complete this form too.
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Client Advisory Contract
This filing ensures that the RIA follows the regulatory authority standards for client advisor contracts set by the state of Delaware. -
Privacy Policy Statement
In this statement, the RIA must share how they will handle, store, and disclose client information. The Privacy Policy Statement must be given to clients at the start of the working relationship and every year after that.
Privacy Policy Statements are uniquely created for each RIA, but the statement must still meet the state of Delaware’s compliance requirements. -
Policies and Procedures Manual
The Policies and Procedures Manual is an internal guide to help maintain and uphold the RIA’s internal processes and procedures across the firm. All functions and procedures must be included, from how the RIA handles client complaints to how it trains new IARs. It must also have information on Anti-Insider Trading plans, Business Continuity, Anti-Money Laundering, and Information Security. -
Code of Ethics
This filing is required to show the state that the RIA aligns with the fiduciary standards required by Delaware.
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*Altruist and its affiliates do not provide legal advice, so it’s important to check with a qualified professional for each state’s registration requirements.
