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Launching a Registered Investment Advisor (RIA) firm in North Dakota presents a significant opportunity, but navigating the state's specific and actively enforced compliance landscape is a critical first step. If you're a financial advisor going independent or an existing firm expanding into the state, you'll need to understand the regulatory framework maintained by the North Dakota Securities Department.
The regulator here doesn't mess around. In September 2025, Commissioner Jon Godfread issued a Stop Order against EPIC Management, LLC, and its executive for potentially unlawful securities activity. A few months earlier, in January 2025, the department joined a $17 million multi-state settlement with Edward Jones. These enforcement actions aren't isolated incidents. They reflect a broader national trend of increased disciplinary actions, including those for technical violations involving off-channel communications.
But here's the thing. While the regulatory environment is strict, the opportunity for independent, fiduciary advice has never been stronger. The Investment Adviser Association's 2024 Industry Snapshot reported all-time highs in both industry-wide assets under management ($144.6 trillion) and the number of clients served (68.4 million). The RIA channel is leading this growth, and independent RIAs are at the front of the pack.
Research from Cerulli Associates projects that independent RIAs will be the fastest-growing segment of the advisory world. By 2028, they're expecting a 12% increase in independent RIA headcount, which would mean about one-third of all financial advisors will operate in RIA channels. Schwab's 2025 RIA Benchmarking Study found that RIA firms saw a 16.6% increase in AUM and a 17.6% increase in revenue in 2024.
So the growth is real. But it comes with a catch. Fidelity's 2024 RIA Benchmarking Study highlighted something pretty uncomfortable. While organic growth rebounded, firm expenses consumed a record-high 82% of revenue in 2023. That margin compression puts a huge emphasis on efficiency, and managing compliance (a mandatory cost center) isn't just a legal hurdle anymore. It's a core business challenge.
This guide walks you through the registration process, state-specific filing requirements, and ongoing compliance obligations mandated by the North Dakota Securities Department. Whether you're launching your first firm or expanding into the state, you'll find the step-by-step information you need to get registered and stay compliant. For a broader overview of what's required at the federal level, check out our guide on RIA compliance requirements.
An investment adviser's registration requirement is primarily determined by Assets Under Management (AUM). The North Dakota Securities Department confirms the threshold: firms with less than $100 million in AUM are subject to state registration.
Beyond the AUM threshold, registration is generally triggered by three factors.
Assets Under Management (AUM) Threshold
The Dodd-Frank Act established the $100 million AUM mark as the primary dividing line. Advisers with AUM under $100 million typically register with the state. Advisers with $100 million or more register with the SEC and become federal covered advisers, though they still have notice filing requirements with the state. If you're approaching or have crossed that $100 million threshold, our guide on SEC compliance software can help you understand what changes when you move to federal registration.
Place of Business
An adviser with a physical office in North Dakota must register with the state, regardless of AUM (assuming they're below the $100 million SEC threshold). This rule applies to in-state founders before they take their first client. So if you're setting up shop in Fargo or Bismarck, registration comes first.
The "De Minimis" Rule
This rule applies to out-of-state advisers. An adviser with no place of business in North Dakota is exempt from registration until it has more than five North Dakota clients in a 12-month period. The sixth client in North Dakota is the trigger that requires full state registration.
It's worth noting that this exemption applies only to investment advisers. The department explicitly states there is no de minimis rule exemption for broker-dealers or securities agents.
This guide is specifically for state-registered firms. Data from the 2024 Investment Adviser Industry Snapshot provides a clear profile of this demographic. On average, a state-registered adviser has 2 non-clerical employees, 52 clients, and $26 million in assets under management. The North Dakota compliance framework is built for firms of this scale.
The registration process is managed electronically and requires submissions to both the national IARD system and the state regulator. Here's how it works.
Before any securities filings, the firm must be established as a formal business structure like an LLC or S-Corp. The official North Dakota IA and IAR Guidebook states the first step is to register the firm with the North Dakota Secretary of State's office and obtain an Employer Identification Number (EIN) from the IRS.
All registration filings are processed electronically through the Investment Adviser Registration Depository (IARD). This is the online system used by all state and federal regulators.
Form ADV Part 1 is the online component containing an adviser's business information. Form ADV Part 2A is the client-facing brochure describing services, fees, and conflicts of interest. It's important to clarify that while the IARD system is operated by FINRA, RIAs are regulated by the North Dakota Securities Department, not FINRA. The state simply uses FINRA's system to process applications.
Each individual providing advice for the firm must be registered as an IAR. This is done by filing Form U4 through the Central Registration Depository (CRD) system, which is the companion system to IARD.
IAR applicants must demonstrate competency by passing the Series 65 exam or the Series 66 and Series 7 exams combined. The state waives this exam requirement for individuals holding one of five professional designations: Certified Financial Planner (CFP), Chartered Financial Analyst (CFA), Chartered Investment Counselor (CIC), Chartered Financial Consultant (ChFC), or Personal Financial Specialist (PFS).
The firm must fund its IARD account to cover the required state and system fees, which are detailed in the next section.
This is a critical step that differs from many other states. After the electronic IARD filing, state-registered firms must submit two documents directly to the North Dakota Securities Department:
By requesting the client contract upfront, the regulator can proactively review fee structures, refund policies, and conflict-of-interest disclosures before the firm begins operations.
Now here's something interesting that trips up a lot of people. While many third-party compliance websites state that North Dakota requires the submission of a balance sheet and income statement, the North Dakota Securities Department website explicitly clarifies this is not the case for state-registered firms: "North Dakota does not require the submission of annual financial statements." This is actually a significant distinction that simplifies the initial application process.
The total cost of registration and renewal involves two components: fees paid to the State of North Dakota and system processing fees paid to IARD. The following fee schedule is based on 2025 data provided by the North Dakota Securities Department and a September 17, 2024, press release from the North American Securities Administrators Association (NASAA).
State Registration Fee for RIA Firm: $120 paid initially and annually to North Dakota via IARD.
State Registration Fee for IAR: $60 paid initially and annually per representative to North Dakota via IARD.
IARD System Fee for RIA Firm: $0 for 2025. NASAA announced a waiver of this system fee for state-registered firms.
IARD System Fee for IAR: $15 annual system processing fee paid to IARD per representative.
For 2025, a sole proprietor (one firm, one IAR) will pay a total of $195 ($120 + $60 + $15) for their initial registration or annual renewal. That's pretty reasonable compared to some other states.
Registration is only the beginning. North Dakota requires RIAs to follow strict ongoing compliance obligations. And these are the obligations that separate firms that stay in business from firms that get shut down.
All registered firms must file an annual amendment to their Form ADV. This filing confirms the information is still accurate and must be submitted via IARD within 90 days of the end of the investment adviser's fiscal year. So if your fiscal year ends December 31st, your Form ADV amendment is due by March 31st.
All firm and IAR registrations expire on December 31st. The renewal process is managed through the IARD/CRD system. Regulators issue preliminary renewal statements in November, and firms must pay all renewal fees by the deadline in December to avoid termination. Missing this deadline is not something you want to do.
This is probably the most significant recent change to state compliance. Following an order signed on October 10, 2023, North Dakota implemented a mandatory CE requirement effective for the 2024 compliance year.
Requirement: Every IAR registered in North Dakota must complete 12 credit hours of CE each year.
Breakdown: The 12 credits must consist of six credits in "Products and Practices" and six credits in "Ethics and Professional Responsibility."
Tracking and Penalties: IARs can track their progress through FINRA's Financial Professional Gateway (FinPro). Failure to complete the annual CE requirement will result in a "CE Inactive" status and will eventually lead to registration termination. That's a hard stop on your ability to do business.
With automated compliance tools like Luthor, tracking these CE deadlines becomes significantly easier. The platform can monitor your team's CE status and send reminders before deadlines, so you're never caught off guard by a missed requirement.
North Dakota's rules on financial requirements are uniquely defined by what is disallowed. The official Investment Adviser and Investment Adviser Representative Guidebook explicitly states, "North Dakota law does not allow custody of client assets."
This rule is critical because the department clarifies that the direct deduction of advisory fees from a client's account is considered a form of custody. So firms must arrange for fees to be paid by clients directly or have the client provide written authorization to the qualified custodian to debit fees. For more information on selecting the right custodian for your practice, see our guide on RIA custodians.
Because custody is not permitted, the typical $35,000 minimum net worth requirement seen in other states does not apply. The state does not specify a minimum net worth for non-custody firms and, as noted previously, does not require the submission of annual financial statements.
Firms must create and maintain a comprehensive set of books and records, as required by North Dakota Century Code (N.D.C.C.) 10-04-10.3 and N.D. Admin Code 73-02-07-01. This includes typical financial records, client suitability information, and all client communications.
A specific requirement in the administrative code is the maintenance of "A complaint file containing a separate file of all written customer or client complaints". So you need to keep detailed records of any client complaints, and they need to be organized in a way that the regulator can review them during an exam.
Firms must maintain a WSP or compliance manual tailored to their specific business. The state regulator (in its list of common deficiencies) specifically warns against using generic, "off the shelf" manuals that are not customized to the firm's actual practices.
The compliance manual must include:
The regulator's list of common deficiencies also highlights operational failures, such as failing to properly submit IARD changes and misunderstanding the custody rule. These mistakes underscore the need for robust internal procedures. A generic compliance manual downloaded from the internet will not pass muster during a state exam.
The North Dakota Securities Department does not publish a specific service-level timeline. But the general industry average for a state-level RIA registration is between 45 and 90 days. North Dakota also participates in "coordinated review" programs, which are designed to expedite the registration process for certain offerings. So the timeline can vary a bit based on the complexity of your application and how quickly you respond to any deficiency letters.
Yes. An out-of-state investment adviser that does not have a physical place of business in North Dakota is not required to register until it has more than five clients who are residents of the state within a 12-month period. Registration is required before taking on the sixth client. Once you hit that threshold, you need to register before you can legally service that client.
An Investment Adviser Representative (IAR) must pass the Series 65 exam OR the Series 66 and Series 7 exams (combined). The state provides a waiver for this examination requirement if the individual holds an active CFP, CFA, CIC, ChFC, or PFS professional designation. These designations demonstrate a level of competency that satisfies the state's requirements.
No. A physical office (a "place of business") in the state is one of two primary triggers for registration. The other trigger is exceeding the 5-client de minimis rule. An advisory firm located entirely in another state with 10 North Dakota clients and no office must still register. So you can be based anywhere in the country and still need to register in North Dakota if you have enough clients here.
Effective for the 2024 compliance year, all IARs registered in North Dakota must complete 12 credit hours of CE annually. The requirement is broken down into six credits for "Products and Practices" and six credits for "Ethics and Professional Responsibility." This is a new requirement that took effect recently, so if you haven't been tracking it, you need to start now.
The state does not specify a minimum net worth or capital requirement for non-custody firms. This rule is simplified because North Dakota state law does not permit state-registered RIAs to have custody of client assets or funds, a practice which includes the direct deduction of advisory fees. So you don't need to worry about maintaining a certain capital level, which is one less thing to track.
Registering and operating an RIA in North Dakota requires a precise understanding of the state's regulatory framework. The key takeaways are the specific state-level filings (the Affidavit of Activity and Client Contract), the explicit prohibition on custody, and the new, mandatory 12-credit annual CE requirement for all IARs.
As firms grow, the challenge shifts from initial registration to managing ongoing compliance. The data is clear: the RIA industry is expanding, but so are operational costs, with expenses consuming a record 82% of revenue. In this environment, manual, time-consuming compliance tasks are a direct drain on profitability.
Compliance isn't optional, but how you manage it can make the difference between a profitable, growing practice and one that's constantly fighting fires. When your compliance manual needs to be customized to your firm's specific practices, when you're tracking CE deadlines for multiple IARs, when you're managing annual Form ADV amendments and state renewal deadlines, the administrative burden adds up quickly.
That's where an automated approach can help. Luthor is built to streamline the complexities of state-level RIA compliance. From managing Form ADV amendments and tracking IAR CE deadlines to ensuring your marketing materials meet regulatory standards, the platform turns compliance from a costly operational burden into a streamlined, efficient process. If you're looking for a way to reduce the time and risk associated with compliance tasks, request demo access to see how Luthor can help your firm stay compliant while focusing on growth. Learn more about how RIA compliance software can transform your practice's approach to regulatory requirements.