Are you thinking about starting an RIA in South Dakota? You’ll need to become familiar with the state's requirements as it varies from state to state. In this article, we’ll list what’s required for South Dakota.
In South Dakota, an advisor who lives in the state, serves SD residents, or solicits in the state must register their RIA.
If setting up your RIA independently seems overwhelming, consider hiring a compliance consultant to help make this process easier.
Financial statement requirements for the state of South Dakota:
Advisors must have one of the following professional designations to operate in the state: Series 65, Series 66 and Series 7, CFP, CFA, CIC, ChFC, or PFS.
All state registration filing fees must be paid, as well as completing and submitting the following tasks for Individual Advisor Representatives (IARs) to register their RIAs successfully:
Submit FINRA Entitlement PaperworkWhile FINRA doesn’t regulate or supervise RIAs, the state does use its system to process registered investment advisor applications. Therefore, IARs must apply for access to FINRA’s WebCRD/IARD online system.
Form ADV Part 1 (online portion)Form ADV Part 1 is solely about the firm and will include information about ownership, clients, business practices, employees, any disciplinary events of the advisor or employees, and affiliations. This is the online component of the ADV and is also used to upload ADV Part 2A and ADV Part 2B.
Form ADV Part 2A (paper and online)Form ADV Part 2A is known as the disclosure brochure for the firm. The advisor will include information about fees, services, disciplinary disclosures, and other details about the firm within this brochure. South Dakota requires that this brochure be written in plain English and easily read and understood by clients. This is also required to be given to prospective and current clients.
Form ADV Part 2B (paper and online)For Form ADV Part 2B, an advisor will share information about themselves. This brochure will include details about their education, employment, potential conflicts of interest, and any disciplinary actions.
It should also be noted that any Executive Officers or representatives who advise clients must complete this form.
In most cases, the state also requires Form ADV Part 2B to be given to clients.
Client Advisory ContractThis must follow the regulatory authority standards for client advisory contracts in South Dakota.
Code of EthicsThis filing ensures that the RIA aligns with the fiduciary standards required by the state of South Dakota.
Policies and Procedures ManualThis manual will contain information about how the RIA maintains and enforces its internal policies. It must include details about how the RIA handles client complaints to how it trains new IARs. Additionally, it must have information on Anti-Insider Trading plans, Business Continuity, Anti-Money Laundering, and Information Security.
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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.