Note: this page was updated on May 2, 2024
Making the jump to independence provides a unique opportunity for advisors to better serve their clients while at the same time pursuing fulfillment and professional growth.
If you’re a North Carolina advisor considering making this transition, there are a range of requirements you’ll need to meet when starting an RIA. From understanding North Carolina's specific regulatory landscape to establishing your practice, this guide will provide a step-by-step approach to starting an RIA in North Carolina.
Who is required to register in North Carolina?
If you manage less than $100 million in assets, serve more than five residents in North Carolina and/or market your services there, you typically must register with the state as an RIA. Note: if you manage assets exceeding $100 million, you may need to register with the SEC instead.
The registration process is overseen by the Securities Division of the North Carolina Secretary of State, and involves several key steps and requirements.
What licenses does an RIA need in North Carolina?
To become an RIA in North Carolina, you must first pass certain exams or hold specific professional designations. The most common way to meet this requirement is by passing the Series 65 exam. Alternatively:
- You can pass the Series 66 and Series 7 exams combined
- Obtain another designation, such as CFP, CFA, CIC, ChFC, or PFS
These licenses demonstrate your sufficient knowledge and expertise in the field of investment advising.
For a comprehensive look at how to start a successful RIA – in North Carolina, or any other state – check out our Going Independent Series, which covers everything you’ll need to know about the jump to independence: from compliance set up, to transitioning existing clients, to scaling your new independent firm.
How much does it cost to register an RIA in North Carolina?
All RIA firms that register with the state of North Carolina must pay initial and annual registration fees for both the firm itself and each IAR it employs. Those annual fees for North Carolina in 2024 can be found below:
RIA Fee: $300
Investment Advisor Representative (IAR): $75
Note: additional fees may apply depending on the size of your firm and how you’re required to register. To see the full list of requirements, visit the North Carolina Secretary of State’s website.
How to register as an RIA in North Carolina
Registering to become an RIA in North Carolina requires advisors to complete all necessary documentation, as well as set up ongoing procedures to ensure they remain in compliance. The basic process is outlined below:
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- Prepare Your Documents: Gather all necessary documents, including Form ADV, financial statements, and disclosure documents. Ensure all information is accurate and current. Many of these documents can be found on the website of the NC Secretary of State.
- Register with FINRA: Create an account with FINRA's WebCRD/IARD online system. This is where you will submit your registration application and other required documents.
- Pay Registration Fees: Pay the required initial and renewal state registration fees through the Investment Adviser Registration Depository (IARD) system.
- Complete Form ADV: Fill out Form ADV Part 1 and provide brochures in Form ADV Part 2A and Part 2B. These forms will provide detailed information about your firm and its services.
- Establish Policies and Procedures: Develop the necessary policies and procedures for your firm, such as a Policies and Procedures Manual, Client Advisory Contract, Code of Ethics, Privacy Policy Statement, Anti-insider Trading Policy, and Business Continuity Plan.
- Register Investment Advisor Representatives: Investment advisor representatives (IARs) will also need to register individually. They must complete Form U4 on CRD and meet the examination or designation requirements. Each IAR must also submit ADV Part 2B (more on this below).
- Maintain Compliance: Once registered, it's crucial to stay compliant with all regulatory requirements. This includes updating your Form ADV annually, paying renewal fees, and ensuring that your policies and procedures are up to date.
Financial statement requirements for RIAs in North Carolina
As part of the registration process, RIAs in North Carolina must submit financial statements for their business, including a balance sheet and income statements. These should be prepared by your accountant or management team and provide a clear picture of your firm's financial health.
How long does it take for RIA registration approval in North Carolina?
The process of registering as a Registered Investment Advisor (RIA) in North Carolina typically spans between 45-90 days, starting from when you first initiate the process until the NC Securities Division officially confirms the filing.
After submitting all necessary documents and covering the registration fees, North Carolina regulators may take up to 45 days to review your RIA registration application. During this period, it’s not uncommon for the state to send something called a “deficiency letter” requesting further details or clarifications on your initial registration.
The response to a deficiency letter requires careful attention. Advisors should proactively address any issues raised to ensure the approval process can move forward smoothly.
RIA forms and policies checklist for North Carolina
To help you navigate the RIA registration process in North Carolina, here's a checklist of forms and policies you'll need:
- Form ADV Part 1 (online)
In this portion of the ADV, RIAs will disclose information about how they conduct business. The information includes details about the advisor's business and ownership structure and any affiliations related to business practices, clients, and additional information about employees. Part 1 is also used to upload ADV Part 2A and Part 2B.
- Form ADV Part 2A (paper and online)
Form ADV Part 2A is your firm's brochure that details the RIA's services, fees, disciplinary disclosures, and other details. As with other states, North Carolina requires it to be written in plain English.
- Form ADV Part 2B (paper and online)
Unlike 2A, this part is all about the advisor. It contains information about the advisor's employment, education, conflict of interest, and disciplinary information. Anyone else at the firm giving investment advice to clients, including IARs and Executive Officers, must fill out their own Form ADV 2B.
Both of these brochures are given to your clients, prospective and current.
- Business Formation Documents
Copies of articles of incorporation, partnership agreement or articles of organization depending on your firm’s business structure, and any amendments.
- Financial statements
These are your balance sheet and income statements, discussed above.
- Policies and Procedures Manual
For your Policies and Procedures Manual, you must include your RIA’s internal policies on all parts of your business. From handling clients’ complaints to training new advisors to join your firm – every policy and procedure you practice at your RIA must be included and explained in this manual.
Additionally, you will need to include your RIA’s Information Technology Policy, Anti-insider Trading Policy, Business Continuity Plan, and Anti-money Laundering Policy.
- Client Advisory Contract
In this contract, you will detail the relationship your RIA will have with your clients. This contract is also required to meet the regulatory authority standards for client advisory contracts in North Carolina.
- Code of Ethics
This formal document outlines the ethical and professional standards expected of advisors registered with the SEC or North Carolina regulators. The code of ethics ensures advisors act in the best interests of their clients, promoting integrity, fairness, and honesty in all their professional activities.
- Privacy Policy Statement
Your RIA’s Privacy Policy is given to your clients at the beginning of your agreement and must be shared on an ongoing basis annually. It must explain how the firm stores and handles client information.
Your policy should be tailored to your RIA’s specifications and must meet the state of North Carolina’s compliance requirements.
Ready for independence?
Navigating the registration process to start an RIA in North Carolina can seem like a big hurdle, but it doesn’t have to be. Having the right custodian and resources at your disposal throughout the process can make a world of difference in your move to independence.
About Altruist
Altruist helps advisors seamlessly transition to a modern custodial platform built specifically for RIAs. Simplify your tech stack, reduce overhead, delight your clients, and grow your business. True independence awaits.
If you're ready to make the leap, our team of experts is here to help you navigate the path to forming an RIA in North Carolina – schedule a call today.
Still deciding? Explore our in-depth RIA Launch Kit that includes even more detail about the essential steps to get your RIA off the ground in North Carolina and beyond.
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.
