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Launching a Registered Investment Advisor (RIA) firm in Rhode Island can be a rewarding venture, but navigating the state's specific compliance landscape is a critical first step. The investment adviser industry is growing quickly. SEC-registered advisers grew 1.4% to 21,669 firms in 2024, and they're managing $146 trillion in assets. That's a 12.8% jump from the previous year.
But here's what makes the state-registered market interesting. There are 16,575 state-registered firms nationally, and most of them are actually small operations. About 76.4% of these firms have two or fewer employees. This segment also saw assets under management grow by over $18.5 billion in 2024.
So the growth is real. And regulators are paying attention. Compliance isn't something you do once and forget about. Rhode Island regulators issued new requirements in 2025, including Securities Bulletin 2025-1, which introduces mandatory continuing education for IARs. They also issued DBR Guidance 2025-2, which sets new expectations for advisers using data aggregation services.
This guide is for financial advisors going independent, existing firms expanding into Rhode Island, and current Rhode Island RIA principals and Chief Compliance Officers who want to stay ahead of these evolving rules. You'll find a complete overview of the registration process, all associated fees, and the ongoing requirements for maintaining compliance. For broader federal requirements, you might also want to review SEC compliance software options that can help manage both state and federal obligations.
In Rhode Island, RIAs are regulated by the Rhode Island Department of Business Regulation (DBR), Securities Division. The Division is located at 1511 Pontiac Avenue, Cranston, RI 02920, and the primary contact for securities inquiries is DBR.SecInquiry@dbr.ri.gov.
Determining registration jurisdiction is the first step. You need to figure out whether you register with Rhode Island or the U.S. Securities and Exchange Commission. This is primarily governed by your Assets Under Management.
Generally, an investment adviser with less than $100 million in AUM must register with the state securities regulator where it operates. Advisers with $100 million or more in AUM typically register with the SEC.
This $100 million threshold isn't as static as it seems. It represents a potential compliance problem for many mid-sized firms. In an April 2025 speech, an SEC Acting Chairman directed staff to evaluate whether this threshold, which hasn't changed since 2012, remains appropriate. The implication is that the SEC may raise this threshold. If that happens, many currently SEC-registered firms could fall below the new limit, forcing them to de-register with the SEC and register with every state where they have clients, including Rhode Island.
For out-of-state advisers, Rhode Island provides a de minimis exemption. An RIA with no place of business in Rhode Island is not required to register with the state until it has more than five clients who are residents of Rhode Island. The sixth client triggers the registration requirement.
While this "five-client rule" is the national de minimis standard, it's a common compliance trap to assume it's universal. Several states, including Texas, Louisiana, and New Hampshire, require registration with a single client. This highlights the need for a good multi-state compliance strategy as your firm grows.
The de minimis exemption does not apply if the firm maintains a physical presence in the state. If an investment adviser has a "place of business" in Rhode Island, it must register with the DBR Securities Division, regardless of AUM or client count.
The administrative registration process is managed electronically through the Investment Adviser Registration Depository (IARD).
Before any filings can be made, the RIA must be established as a formal legal entity, such as an LLC or S-Corporation, with the Rhode Island Secretary of State.
All registration filings are submitted electronically via the Investment Adviser Registration Depository (IARD), a system operated by FINRA on behalf of state and federal regulators.
Form ADV Part 1: This is the online, check-the-box portion of the application. It details the firm's ownership, business practices, clients, AUM, and any disciplinary history.
Form ADV Part 2 (Part 2A and 2B): This is the narrative, client-facing "brochure" that must be written in "plain English."
Part 2A (The Firm Brochure): Details the firm's services, fees, investment strategies, conflicts of interest, and risk factors. This is uploaded as a PDF to IARD.
Part 2B (The Brochure Supplement): Provides the educational and professional background of each individual who provides investment advice on behalf of the firm.
Every individual who provides investment advice for the firm, including the principals, must be registered as an Investment Adviser Representative.
Form U4: The application for IAR registration is submitted via the Form U4 through the IARD/CRD system.
Exam Requirements: To be licensed as an IAR in Rhode Island, an individual must pass the Series 65 Exam (NASAA Investment Advisers Law Examination).
Exam Alternatives: In lieu of the Series 65, the state accepts a combination of the Series 7 and Series 66 exams.
Exam Waivers: Rhode Island grants an exam waiver for IAR applicants who currently hold one of the following professional designations:
In addition to the electronic IARD filings, the Rhode Island DBR Securities Division requires firms to submit several documents directly to the department for review. These include:
Applicants must pay all required fees through the IARD system. It's important to distinguish between state registration fees paid to Rhode Island and IARD system processing fees paid to FINRA.
As of 2025, NASAA waives the annual firm system processing fee. But a system fee is still assessed for each IAR.
Firm Registration Fee: Paid to Rhode Island through IARD. The cost varies but is typically around $200 for initial registration.
IAR Registration Fee: Each Investment Adviser Representative pays a fee of approximately $50 to $100 for registration.
Annual Renewal Fees: Both firms and IARs are subject to annual renewal fees. The firm renewal fee is approximately $200, and each IAR renewal fee is approximately $50 to $100.
IARD System Fees: While NASAA has waived the annual firm system processing fee for 2025, individual IAR system fees still apply. These are paid to FINRA for using the IARD system.
Registration is only the beginning. Maintaining compliance requires an active, ongoing framework. The 2024-2025 regulatory scene shows a clear focus on fee transparency, fiduciary duty, and technology governance. Understanding these RIA compliance requirements is critical for long-term success.
Annual ADV Update: All RIAs must file an annual amendment to their Form ADV within 90 days of their fiscal year-end to ensure all information is current.
Annual Renewal: The IARD system manages the annual renewal process for all state registrations. Preliminary renewal statements are posted in November, and firms must ensure their IARD accounts are funded for the deduction of renewal fees in December.
Firms must create and maintain a solid WSP, or compliance manual, tailored to their specific business. A generic, off-the-shelf manual isn't enough. A 2025-ready WSP for a Rhode Island RIA must specifically address the newest and highest-priority risks identified by regulators.
Recent state and federal regulatory actions reveal three core pillars for a modern WSP:
Fee Calculation and Billing: The 2025 NASAA report identifies improper fees, fiduciary duty violations, and inadequate compliance policies as top causes for state enforcement actions.
Marketing and Advertising: The SEC's new Marketing Rule is a major focus, and states are examining for compliance.
Cybersecurity and Vendor Due Diligence: Rhode Island's own 2025 guidance makes this a state-specific priority.
On October 7, 2025, the RI DBR issued specific guidance about advisers' use of third-party data aggregation services. These are FinTech tools that "screen scrape" client data from other accounts. The DBR doesn't prohibit these tools but requires advisers to fulfill their fiduciary duty. A WSP must now detail procedures for:
Due Diligence: A thorough review of the vendor's cybersecurity protocols, data privacy policies, and the specific agreements the adviser and the client are entering into.
Disclosures: Clearly disclosing all risks of data sharing to clients.
Reasonable Fees: Ensuring that advisory fees reasonably reflect the service provided. For example, charging a full 1% AUM fee for "view only" access to a held-away account may be deemed unreasonable.
An April 2024 SEC Risk Alert detailed common failures under the new Marketing Rule, which state regulators are using as an examination roadmap. A WSP must have clear procedures to prevent:
Unsubstantiated Statements: Such as claiming to be "seen on national media" when the appearance was a paid advertisement, or misstating personnel qualifications.
Misleading Performance: Cherry-picking profitable trades, using improper benchmarks, or failing to include net-of-fee performance.
Recordkeeping Failures: Failing to maintain copies of all advertisements, including social media posts and the raw data used to support any performance claims.
Rhode Island's Rule 230-RICR-50-05-2 § 2.7 ("Required Records") mandates that firms maintain specific books and records. This rule aligns closely with the federal standard, SEC Rule 204-2. Key categories of required records include:
Financials: Journals, ledgers, bank statements, and checkbooks.
Transaction Memos: A memorandum of every order, showing the person who recommended it, the person who placed the order, the account, and the date.
Communications: Originals of all written communications received and copies of all communications sent relating to advice, recommendations, or transactions.
Client Records: All client advisory agreements and any powers of attorney.
Compliance Records: The firm's Code of Ethics, records of any violations, and copies of all advertisements and supporting performance data.
Rhode Island imposes minimum net worth requirements on state-registered RIAs.
Discretion Only: An RIA that has discretionary authority over client accounts must maintain a minimum net worth of $5,000.
Custody: An RIA that has custody of client assets (for example, by holding assets directly or having access to client bank accounts) must maintain a minimum net worth of $25,000. Working with qualified RIA custodians can help you maintain proper custody arrangements and meet these requirements.
Surety Bond: Advisers with custody are also required to have a surety bond in an amount determined by the director, typically ranging from $100,000 to $1 million.
While the DBR doesn't provide a specific processing time, the general industry average for the entire registration process from entity formation and Form ADV drafting to filing and state review is typically 45 to 90 days.
Yes. An out-of-state adviser with no place of business in Rhode Island is permitted to have five or fewer clients in the state without registering. The sixth client triggers the registration requirement.
An IAR must pass the Series 65 exam OR the Series 66 and Series 7 exams combined. This requirement is waived if the individual holds a CFP, CFA, ChFC, PFS, or CIC professional designation.
Yes. This is actually a big update for 2025. Effective January 1, 2025, Rhode Island adopted Securities Bulletin 2025-1 (Rule 230-RICR-50-05-2-2.7), which mandates annual Continuing Education for all registered IARs.
Requirement: 12 credit hours per year.
Breakdown: 6 credits in "Products and Practices" and 6 credits in "Ethics and Professional Responsibility".
Compliance: IARs will track credits via FinPro. Failure to complete the annual CE will result in a "CE Inactive" status and will prevent the IAR's registration from being renewed.
If you have a physical office or "place of business" in Rhode Island, then yes, you must register with the state regardless of how many clients you have or your AUM level (assuming you're not SEC-registered).
The RI DBR has been active in 2024-2025, joining major multi-state enforcement actions. The primary themes are supervisory failures related to fees and fiduciary duty.
Case Study 1: Raymond James (March 2024): The DBR joined an action that resulted in a $75,000 fine to RI. The firm charged unreasonable commissions on low-principal trades, with some commissions exceeding 90% of the trade value. This was a repeat offense after a 2011 FINRA sanction, highlighting a serious failure of supervision.
Case Study 2: Edward D. Jones (December 2024): The firm was fined $320,754 by RI for supervisory failures related to "reverse churning." FAs moved clients from brokerage accounts, where they had already paid a one-time, front-end sales load on mutual funds, into new fee-based advisory accounts. This caused clients to be charged ongoing advisory fees on those same assets without a proper offset.
Case Study 3: Vanguard (April 2025): Vanguard entered a consent order for misleading statements and omissions related to lowering investment minimums in its Target Retirement Funds. This strategic move forced massive redemptions, generating huge, unexpected capital gains distributions and tax bills for investors in taxable accounts. This shows that an adviser's fiduciary duty extends to disclosing the material risks and tax implications of firm-level decisions.
Launching an RIA in Rhode Island is achievable, but it requires attention to detail. You need entity formation, careful IARD filing of Form ADV Parts 1 & 2 and Form U4s, and the submission of state-specific documents like net worth proof and client agreements.
The data from 2024 and 2025 shows that the real challenge isn't the launch. It's the ongoing operation. The RI DBR is actively enforcing penalties, as seen in the Vanguard, Edward D. Jones, and Raymond James consent orders, with a strong focus on supervisory failures, fee transparency, and fiduciary duty. The DBR is also issuing new rules for 2025, including mandatory IAR Continuing Education and new expectations for FinTech/data aggregation vendor due diligence.
This complex, high-stakes, and quickly changing regulatory scene is exactly why having the right tools is so important. Many compliance tasks, especially around marketing materials, can be time-consuming and prone to human error. Think about the hours spent reviewing social media posts, blog articles, and client presentations to ensure they don't contain unsubstantiated claims or misleading performance data (the exact issues the SEC highlighted in that April 2024 Risk Alert). This is where RIA compliance software becomes really valuable.
Tools like Luthor can help here. Luthor is an AI tool that automatically reviews marketing assets for compliance. It can reduce the risk, effort, and time needed to handle marketing compliance at scale. When you're juggling Form ADV updates, tracking IAR continuing education requirements, reviewing vendor agreements for data aggregation services, and maintaining detailed books and records, automating the compliance review of your marketing materials lets you focus more on serving clients. It's worth considering as part of your compliance framework, especially as the regulatory demands keep growing.