South Dakota RIA Registration and Compliance Guide
Launching a Registered Investment Advisor firm in South Dakota can be a rewarding venture, but getting through the state's compliance requirements is something you need to take seriously from day one. The good news? The process is manageable if you know what you're doing.
This guide is for financial advisors thinking about going independent, existing firms expanding into South Dakota, or anyone who needs to understand what it actually takes to register and stay compliant in the state. We'll walk through the registration process, fees, ongoing requirements, and some of the common mistakes that trip people up.
In South Dakota, RIAs are regulated by the South Dakota Division of Securities, which operates under the Department of Labor and Regulation. The Division takes its oversight role seriously, focusing not just on technical compliance but on making sure clients get clear, consistent information about the services and fees they're paying for.
What makes South Dakota interesting is the state's regulatory approach. The Division publishes detailed guidance on common application deficiencies, which tells you something about their philosophy. They want you to get it right the first time. Their main concern seems to be transparency, so if your Form ADV disclosures don't match what's in your client contract, you're probably going to hear about it.
The investment advisory industry is growing fast right now. The market went from $209.82 billion in 2024 to a projected $219.48 billion in 2025, and that growth isn't slowing down. A recent study by the Investment Adviser Association found that 2024 broke records across the board: 15,870 registered RIAs, 68.4 million clients served, and $144.6 trillion in assets under management.
South Dakota is part of that growth story. The state ranked 4th nationally for growth in CFP professionals between 2021 and 2024, with a 28.5% increase. That's a signal that there's demand here for sophisticated financial advice.
Who is Required to Register as an RIA in South Dakota?
Before you start filling out forms, you need to figure out if you even need to register with South Dakota in the first place. The rules here are pretty clear, but there are some nuances worth understanding.
Assets Under Management Threshold
The main determining factor is your assets under management. If you have less than $100 million in AUM, you generally register with the state. Hit $100 million or more, and you're registering with the SEC instead as a Federal Covered Adviser. Federal Covered Advisers don't register with states, but they do have to file notices in states where they operate (more on that in a bit).
The "De Minimis" Rule
Here's where things get interesting for out-of-state advisers. South Dakota has what's called the "de minimis" exemption under SDCL 47-31B-403(b)(2). If you don't have a physical office in South Dakota, you can serve up to five clients in the state without registering. Client number six triggers the registration requirement.
This is actually a useful rule from a business perspective. You can test the South Dakota market, build some relationships, and see if it makes sense before you commit to the registration costs. Think of it as a trial period for market entry.
Place of Business
If you open a physical office anywhere in South Dakota, you need to register. Period. It doesn't matter how many clients you have. The state wants oversight of any adviser operating from within its borders.
Institutional Investors Exception
There's another exemption if your only South Dakota clients are institutional investors (banks, insurance companies, registered investment companies, large employee benefit plans). So if you're only serving institutional clients and don't have an office in the state, you're probably exempt.
The South Dakota RIA Registration Process: A Step-by-Step Guide
Getting registered is a multi-step process that involves corporate setup, electronic filings, and preparing a bunch of documents. Everything flows through the Investment Adviser Registration Depository (IARD), which is the online system run by FINRA. Don't let that confuse you though. FINRA just operates the system, they don't regulate state-registered RIAs.
Form a Legal Entity
Before you can register, you need a formal business structure. Most advisers set up as an LLC or corporation (S-Corp or C-Corp). You'll file your formation documents with the South Dakota Secretary of State. While you could technically operate as a sole proprietor, a formal entity gives you liability protection, which is probably worth the extra paperwork.
File Form ADV Part 1 and Part 2 through IARD
Form ADV is the core of your registration. It's split into parts, and each serves a different purpose.
Form ADV Part 1A and 1B is the electronic portion filed through IARD. This is where you provide details about your business structure, ownership, client types, services, affiliations, and any disciplinary history. Part 1B has additional questions specific to state-registered advisers.
Form ADV Part 2A is your client brochure. It's written in plain English (that's actually a requirement) and describes your services, fees, conflicts of interest, risks, and background. Every prospective client gets this document. The content needs to match what you said in Part 1, which is where a lot of firms mess up. Understanding broader SEC RIA compliance standards can help you avoid these common mistakes.
Form ADV Part 2B is a supplement you create for each individual adviser who works with clients. It covers their education, experience, disciplinary history, and conflicts of interest. Clients get this too.
The consistency across these documents is where firms often run into trouble. The South Dakota Division of Securities specifically flags inconsistencies between Form ADV Part 1, Part 2, and your client contract as a common deficiency. If you say one thing about fees in your brochure and something different in your contract, your application is getting kicked back.
Register Investment Adviser Representatives (IARs)
Every individual who gives investment advice on behalf of your firm needs to register as an IAR using Form U4. This form discloses personal information, work history, and any disciplinary issues.
IARs also need to meet exam requirements. You have a few options:
- Pass the Series 65 exam
- Pass the Series 66 exam (if you also hold a Series 7 license)
- Hold one of several professional designations: CFP, CFA, PFS, ChFC, or CIC
The professional designations serve as a waiver of the exam requirement, which can save time if you already have one of these credentials.
Pay State Filing Fees
Here's what the registration will cost you (these are current as of 2025):
Initial IA Firm Registration: $100.00 to South Dakota Division of Securities
Annual IA Firm Renewal: $100.00 to South Dakota Division of Securities
Initial IAR Registration: $50.00 to South Dakota Division of Securities (plus a $15.00 FINRA processing fee)
Annual IAR Renewal: $50.00 to South Dakota Division of Securities
All payments go through the IARD system. You fund your IARD account and authorize the payments from there. Your application isn't officially filed until the fees are paid, so don't skip this step.
If you're a Federal Covered Adviser making a notice filing, that's $200.00 initially and $200.00 for annual renewal.
Submit State-Specific Documents
Beyond the electronic filings, you need a set of supporting documents ready. The state can request these during the review process, and having them prepared shows you're serious about compliance.
Client Advisory Contract: This has to comply with ARSD 20:08:05:29. It needs to clearly spell out your services, fees, billing method, any discretionary authority, and termination terms. And again, it has to match your Form ADV disclosures.
Policies and Procedures Manual: This is your internal compliance guide. It needs to cover business continuity planning, cybersecurity, anti-insider trading, and your Code of Ethics. The manual should be tailored to how your firm actually operates, not just a generic template. Meeting comprehensive RIA compliance requirements means having procedures that reflect your actual business practices.
Privacy Policy Statement: You're required to explain how you handle client information. This goes to clients at the start of the relationship and annually after that.
Code of Ethics: This establishes your fiduciary standards and includes rules about personal trading by your staff.
These documents form the backbone of your compliance program. Tools like Luthor can help you review these materials for compliance issues before you submit them, which can save you from common mistakes that delay approval.
South Dakota RIA Registration and Filing Fees
Let's break down all the costs you'll encounter in one place:
For the firm, you're looking at $100 for initial registration and $100 annually to renew. Each IAR costs $50 to register initially, $50 to renew each year, plus a $15 FINRA processing fee. If you're a Federal Covered Adviser doing a notice filing, that's $200 initially and $200 for annual renewal.
These aren't huge fees compared to some states, but they add up when you're registering multiple IARs. Budget accordingly.
Ongoing RIA Compliance Requirements in South Dakota
Getting registered is just the beginning. Staying compliant requires ongoing attention to several requirements that are designed to keep your disclosures accurate and your firm financially stable.
Annual Form ADV Update
Every year, you need to file an annual updating amendment to your Form ADV. This is due within 90 days of your fiscal year-end. The purpose is to keep your public disclosures current about your business, AUM, and personnel.
Renewal
All registrations expire on December 31 each year. You renew through IARD during the fourth quarter. Miss the renewal, and you're operating without a valid registration, which is a problem you don't want.
Compliance Manual and Written Supervisory Procedures
Your compliance manual isn't a document you file and forget. It needs to be a living guide that you actually use and update. It should cover your Code of Ethics, cybersecurity policy, business continuity plan, and privacy policy.
The state expects you to enforce these procedures. During an exam, they'll want to see evidence that you're following your own rules. Having a well-maintained compliance program is probably the single most important thing you can do to prepare for regulatory scrutiny. And if you're managing marketing materials, using compliance review tools can help you maintain consistent standards across everything you produce.
Books and Records Requirements
Under ARSD 20:08:05:23, you need to maintain comprehensive books and records. This includes client contracts, suitability analysis, transaction records, trade confirmations, account statements, financial statements, and copies of all advertisements and communications.
These records are what examiners look at during inspections. If you can't produce them, you're facing potential deficiencies or worse.
Financial Requirements
South Dakota has minimum net worth requirements that depend on what you do:
If you have discretionary authority over client accounts but don't have custody of assets, you need to maintain at least $10,000 in net worth at all times.
If you have custody of client funds or securities (like direct access to bank accounts or acting as a trustee), the minimum net worth jumps to $35,000.
If you don't meet these requirements, you can get a surety bond instead. The bond amount has to equal your net worth shortfall, rounded up to the nearest $5,000.
For financial reporting, firms with custody or those collecting advance fees over $500 per client (six months or more in advance) need to file an audited balance sheet annually within 90 days of fiscal year-end. Firms with just discretionary authority file an unaudited balance sheet.
Frequently Asked Questions About South Dakota RIA Compliance
How long does it take to get registered as an RIA in South Dakota?
If you submit a complete, accurate application, you can expect approval in about 6 to 8 weeks. That timeline depends heavily on the quality of your initial submission. If the state examiner finds deficiencies, your timeline extends based on how quickly and thoroughly you respond.
The most common delays come from inconsistencies across your documents. If your Form ADV, brochure, and client contract don't tell the same story about your fees and services, expect a deficiency letter.
Does South Dakota have a "de minimis" exemption?
Yes. If you don't have a physical office in South Dakota, you can serve up to five clients in the state without registering. The sixth client triggers the registration requirement. This exemption is useful for testing the market before committing to full registration.
What are the exam requirements for IARs in South Dakota?
IARs need to pass either the Series 65 exam or the Series 66 exam (if they also hold a Series 7). Alternatively, holding one of these professional designations in good standing serves as an exam waiver: CFP, CFA, PFS, CIC, or ChFC.
Do I need a physical office in South Dakota to register?
No, you don't need an office to register. But if you do open an office in the state, registration becomes mandatory regardless of how many clients you have. The place of business trigger is separate from the client count trigger.
Final Thoughts
Setting up an RIA in South Dakota requires careful attention to detail, but it's manageable if you understand what the state expects. The key things to remember: keep your documents consistent, maintain your ongoing compliance obligations, and build a real compliance culture that prioritizes client transparency.
The investment advisory industry is growing, and regulatory scrutiny is increasing along with it. A 2025 study showed that assets under management hit $144.6 trillion, a 12.6% increase in one year. With that kind of growth comes more attention from regulators at both the federal and state levels.
For firms in South Dakota, having a strong compliance program isn't just about avoiding problems. It's about building client trust and creating a stable foundation for growth. The rules are detailed and they change, so working with experienced compliance counsel is a smart move.
And speaking of compliance, managing all these requirements across your marketing materials and client communications can be time-consuming. That's where tools like Luthor come in. Luthor is an AI-based platform that automatically reviews your marketing assets for compliance issues, helping you reduce risk and handle compliance at scale. If you're spending too much time manually reviewing every piece of content or worried about consistency across your disclosures, it might be worth checking out.
Registration is just the start. Ongoing compliance is where firms either build a sustainable practice or run into trouble. Get the foundation right, maintain your program, and you'll be well-positioned for whatever comes next.
Request a demo to see how Luthor can help streamline your compliance review process.
