It’s exciting to begin the process of starting your RIA; however, it can vary based on where you live. We previously shared what you need to know about registering with the SEC, but what about your state? To begin, let’s take a look at Texas.
Who is required to register in the state of Texas?
If you meet any of the following, you will need to register in Texas:
- You have at least 1 client or more that's a Texas resident.
- You manage less than $100 million AUM within the state (if you manage more than $100 million in AUM, you might need to register with the SEC).
- If you market any of your services in the state.
If you need more guidance, we’re here to help you navigate the path to starting your RIA:
- Planning a transition? Our team of experts is here to assist; schedule a call today.
- Still Deciding? Access our in-depth RIA Launch Kit that covers everything you need to know to start your RIA.
- Consider hiring a compliance consultant to help make your life easier. If that’s not possible, this article covers the financial statement and document requirements you must provide to the state.
Registration requirements for Advisors
- In addition to passing Series 65, Series 66 & 7 combined or obtaining designation: CFP, CFA, CIC, ChFC, or PFS designation, an advisor will also need to submit the form U-4 and ADV Part 2B.
Forms & Policies required by Texas
- Payment of all State of Texas registration filing fees
- FINRA Entitlement paperwork
Like many states, Texas also uses FINRA’s WebCRD/IARD system to process applications. Advisors must apply to FINRA for an account to their WebCRD/IARD online system to complete their registration. - Form ADV Part 1 (online)
Part 1 of the Form ADV covers details about the advisor's business and ownership structure and any affiliations related to business practices, clients, and additional information about employees. In other words, part 1 discloses information about how the RIA conducts business.
Also, since this portion is done online, you will upload ADV Part 2A and 2B.
- Form ADV Part 2A & Part 2B (paper and online)
Part 1 of Form ADV covers the structure of your RIA. Parts 2A & 2B describe your services, fees you charge, disciplinary disclosures, and other details of your RIA. These brochures include employment history, education, conflicts of interest, and disciplinary information.
Part 2A & Part 2B are given to all clients: prospective and current. Texas (as well as most states) requires that this portion of the ADV be written in plain English so your clients can easily understand it.
- Client Advisory Contract
In this contract, you will outline the relationship between your RIA and how you advise your clients. This contract must meet the regulatory authority standards for client advisory contracts in Texas. - Policies and Procedures Manual
Your Policy and Procedures Manual must include all your RIA’s internal policies on all parts of your business. From training new advisors to handling clients' complaints–every policy and procedure your RIA adheres to must be included and explained in this manual.
The manual should also include your RIA’s Information Technology Policy, Business Continuity Plan, Anti-insider Trading Policy, and Anti-money Laundering Policy. - Privacy Policy Statement
This policy should be tailored to your RIA’s specifications and must meet the State of Texas’ compliance requirements.
Your RIA’s Privacy Policy is given to your clients at the beginning of your agreement and annually after that. It must explicitly state how the firm handles client information. - Code of Ethics
The State of Texas (and all states) require that you meet their Code of Ethics standards. The Code of Ethics filing ensures that you and your RIA are compliant with the state.
Additional state-required documents
- Articles of Incorporation or other documents indicating form or organization, certified by the appropriate jurisdiction
- By-laws or Operating Agreement
- Balance sheet and Certification of Balance Sheet by Principal Financial Officer Form 133.18
- Fee Schedule
Starting an RIA doesn’t have to be complicated, and you don’t have to go through it alone. We have plenty of resources on our site to guide you, such as this RIA launch kit our team has put together.
With Altruist, you can seamlessly transition to a custodial platform built for RIAs. Simplify your tech stack, reduce overhead, delight your clients, and grow your business. True independence awaits. Book a call with one of our transitional specialists now.
*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.
