March 22, 2012

Q&A From Our Recent SEC to State Webinar

We recently hosted a webinar on the SEC to State transition for mid-sized RIAs.  For those that could not attend, we are posting the Q&A from this session. (We have also posted the presentation slides here.)

Q:  Can I continue to use my existing client advisory agreement? Will there be any grandfathering?

A:  Advisors must amend their advisory agreements to comply with any state-specific requirements that will apply to them. Requirements for agreements will vary state to state.

Q:  Does my compliance manual need to be tailored for each state?


A:   Yes.  Your compliance manual must reflect any specific requirements of the states in which you will be registered. It is a challenge when you have multiple states as you must reflect the rules of one state without contradicting other states. As you only want one manual, each policy should reflect the common requirements for all states and then specifically note items that differ in a given state. 

Q:  Are there some states that will move my registration along quicker than others?

A:   Definitely.  Our suggestion is to prioritize your "primary" or "home" state since other states will likely hold your application until you are approved by your primary state.

Q:  If my fiscal year end does not fall on December 31, 2011, do I need to amend by March 30, 2012?
A:  Yes. ALL advisors must file an ADV Amendment between 1/1/12 and 3/30/12 to update assets and confirm their registration status.

Q:  What date must I use for calculating regulatory assets under management? December 31, 2011? What if my FYE is not December 31?

A:  Advisors may use any date between January 1 and March 30 to determine regulatory assets under management.  This is the case for ALL advisors, regardless of fiscal year end.  If you are SEC-registered on December 31, 2011 and you have less than $90M in AUM then you will have to switch.

Q:  What if the state does not approve my firm before the June 28, 2012 deadline?

A:  Regulators have been silent on this.  Our recommendation is to submit (and document) all filings as early as possible.  If you do not get approved by June 28th, you will at least be able to demonstrate that you have made a good-faith effort to transition your firm. If you mail everything in late June, it will become much more difficult to make this claim. Do not withdraw SEC registration until all states have approved your firm.


If you have any additional questions, visit our SEC to State portal or email us. 

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