SEC-registered, state-registered, or exempt: what an advisory firm's registration means
Most advisory firms managing $100 million or more register with the SEC; smaller firms generally register with the securities regulator in their home state. Both are held to a fiduciary standard. Exempt reporting advisers, mostly managers of private funds, file parts of Form ADV as reports and are not registered.
Every firm page on AdvisorCensus carries a small label: SEC-registered, state-registered, or exempt reporting adviser. It's easy to read that as a ranking, as if SEC registration were a gold star. It isn't. The label mostly tells you how big the firm is, and which regulator is looking over its shoulder.
Who registers where
Federal law splits oversight of investment advisers between the SEC and the states, largely by size.
- SEC-registered firms generally manage $100 million or more in regulatory assets. There's a buffer: a firm can register with the SEC once it reaches $100 million and doesn't have to switch back to the state until it drops below $90 million. Some smaller firms register with the SEC for other reasons, such as advising a registered fund or operating in many states.
- State-registered firms are generally smaller, below that $100 million line. They register with the securities regulator in the state where they're based, and sometimes in other states where they have clients.
- Exempt reporting advisers are mostly managers of venture capital or smaller private funds. They're exempt from registration but still file parts of Form ADV as reports. They rarely work with individual investors.
Registration isn't an endorsement from anyone. It means the firm files Form ADV, keeps required records, owes clients a fiduciary duty, and can be examined. A three-person state-registered practice and a large SEC-registered firm are held to the same basic standard.
Does it matter for you?
A little, in practical ways. A state-registered firm is usually a smaller practice where you're more likely to work directly with the owner. Neither the SEC nor the states examine every firm every year; each examines a share of its firms annually. An SEC-registered firm usually has more staff, more clients, and more structure, which some people prefer.
Either way, the registration type tells you which regulator to contact if something goes wrong: the SEC for federal firms, or your state securities regulator (NASAA lists them all) for state firms.
"Notice filed" states
SEC-registered firms don't register with each state, but most states ask them to file a notice if they have clients there. That's what the "states registered or notice-filed" line on a firm page shows. A long list usually means the firm serves clients across the country, often remotely.
Checking a firm on AdvisorCensus
The registration badge sits next to every firm's name, and the Registration section of the firm page shows the status exactly as filed. Metro pages let you filter by registration type if you'd like to see only the smaller state-registered practices near you, or only SEC-registered firms.
Common questions
Is an SEC-registered advisor better than a state-registered one?
Not necessarily. Registration follows size, not quality. A state-registered firm is often a small practice. Neither the SEC nor the states examine every firm every year; each examines a share of its firms annually.
What does registered investment adviser mean?
A firm registered with the SEC or a state to give investment advice for pay. Registration is not an endorsement; it means the firm files Form ADV, keeps required records, and can be examined.
What is an exempt reporting adviser?
A firm, usually a venture capital or small private fund manager, that is exempt from registration but still files parts of Form ADV. These firms rarely work with individual investors.
Sources
- SEC, Form ADV general instructions
- NASAA, find your state securities regulator
- SEC, Investment Adviser Public Disclosure (IAPD)
Written from the public record and the regulators' own instructions. AdvisorCensus is a directory built from Form ADV filings; nothing here is investment advice. Spot something wrong? Tell us.