Tennessee RIA Registration and Compliance Guide

Launching a Registered Investment Advisor firm in Tennessee can be a rewarding venture, but the state's specific compliance requirements are something you need to get right from day one. The regulatory framework here is pretty comprehensive, and missing a step can cost you time, money, and possibly your ability to operate.

This guide is for financial advisors who are thinking about going independent in Tennessee, or for existing firms that want to expand into the state. We're going to walk through everything you need to know about registering as an RIA, from the initial filing to ongoing compliance obligations. And we'll cover the specific rules administered by the Tennessee Department of Commerce and Insurance (TDCI) Securities Division, the state agency that oversees investment advisors.

Who is Required to Register as an RIA in Tennessee?

Before you start any paperwork, you need to figure out whether you actually need to register with the state. The answer depends on a few things, including where your office is located, how much money you manage, and how many clients you have in Tennessee.

Assets Under Management (AUM) Threshold

The dividing line between state and federal registration is pretty straightforward. If your firm manages less than $100 million in assets, you'll probably register with Tennessee. Firms with $100 million or more typically register with the SEC instead. So if you're just starting out or running a smaller practice, the TDCI Securities Division is going to be your regulator.

The "De Minimis" Rule

Tennessee has what's called a de minimis exemption, which basically means you can have a small number of clients in the state without registering. But the exemption works differently depending on where your office is located.

If you don't have an office in Tennessee, you can serve up to five clients in the state over any twelve month period without registering. That's the standard de minimis threshold that most states use.

But if your main office is actually in Tennessee, the state gives you a bit more room. You can have fewer than fifteen clients and still avoid registration, as long as you're not holding yourself out to the public as an investment advisor. This is kind of nice for small, locally focused firms that are just getting started.

Place of Business

Having a physical office in Tennessee means you need to register with the state, regardless of how many clients you have. There's no getting around this one.

The Custody Issue

And this is where things get a bit tricky. If you have custody of client funds or securities, you cannot use the de minimis exemption at all. Period. Even if you only have one client in Tennessee.

The TDCI has been pretty clear about this. Their logic is that having custody triggers specific rules under Tennessee law, and those rules require you to be registered. So custody and exemptions don't mix. This means if your business model involves holding client assets, acting as a trustee, or even having certain types of Standing Letters of Authorization to move client money, you're going to need full registration from the start. This is probably the single most important factor in determining your regulatory path.

The Tennessee RIA Registration Process: A Step-by-Step Guide

Once you've determined that registration is required, the actual process is pretty detailed. Most of it happens through an online system, but Tennessee also wants some additional documents sent directly to them.

Form a Legal Entity

Before you can register, you need to have a formal business structure in place. That means setting up an LLC, S-Corp, or some other recognized entity. You can't register as a sole proprietorship under your own name.

File Form ADV Part 1 and Part 2 through IARD

The Investment Adviser Registration Depository, or IARD, is the online system you'll use for registration. It's run by FINRA, but don't be confused. FINRA doesn't regulate state registered RIAs. They just operate the filing system for state regulators.

Form ADV has two main parts. Part 1 is the check the box section where you provide factual information about your firm, like your business structure, the services you offer, your client base, and any disciplinary history. Part 2 is your client brochure, written in plain English, where you explain your services, fees, conflicts of interest, and business practices. You also need Part 2B, which gives information about the specific individuals who will be advising clients.

Both parts need to be uploaded to IARD as text searchable PDF files.

Register Investment Adviser Representatives (IARs)

Every individual who gives investment advice on behalf of your firm needs to register separately as an IAR. This is done using Form U4, which you file through the WebCRD system (also operated by FINRA).

Each IAR needs to pass certain exams. The most common path is passing the Series 65 exam. Alternatively, someone can pass both the Series 7 and Series 66 exams. If your IAR already holds a professional designation like CFP, CFA, ChFC, PFS, or CIC, the exam requirement is waived.

And there's a fingerprinting requirement. Some compliance websites say fingerprints aren't needed in Tennessee, but that's actually wrong. Tennessee law requires IAR applicants to submit fingerprints for criminal background checks by both the Tennessee Bureau of Investigation and the FBI. This is mandatory, not optional. Missing this step can delay or even derail your application.

Pay State Filing Fees

The fees for Tennessee registration are straightforward. The firm pays $200 for initial registration and $200 annually for renewal. Each IAR pays $50 for initial registration and $50 for renewal. There's also a $15 per IAR annual fee that goes to FINRA for the system itself.

But there's another fee that catches people off guard. Tennessee has what's called a Professional Privilege Tax. Investment advisors are required to pay $400 annually to the Tennessee Department of Revenue. This is separate from your registration fees and is due every year on June 1. And if you don't pay it, the TDCI won't process your registration renewal in December. So you could be fully compliant with all your TDCI paperwork, but your registration could still lapse because of an unpaid tax bill to a completely different state agency. You need to track this separately.

Submit State Specific Documents

Tennessee wants several additional documents sent directly to the Securities Division. The preferred method is email to Securities.2@tn.gov with your firm's CRD number in the subject line.

You'll need to send certified copies of your organizational documents, like your Articles of Incorporation or Organization, your Operating Agreement or Bylaws. You'll also need to provide a copy of your standard client advisory contract.

And you'll need a balance sheet dated within 90 days of your application. If your firm is going to have custody of client assets, or if you require clients to prepay more than $500 in fees six months in advance, that balance sheet needs to be audited by an independent CPA.

The Timeline

Tennessee law says that if everything is in order and no issues are found, your registration becomes effective at noon Central Time on the 30th day after you file a complete application. The TDCI can approve it earlier if they want, or they can delay it if you need to submit amendments.

Tennessee RIA Registration and Filing Fees

Let me break down all the costs you'll be dealing with for Tennessee registration and ongoing compliance.

Firm Registration Fee: $200 initially, $200 annually

IAR Registration Fee: $50 per person initially, $50 per person annually

FINRA System Fee: $15 per IAR annually

Professional Privilege Tax: $400 annually (due June 1 to the Department of Revenue)

So a solo advisor registering a firm with just themselves as the only IAR would pay $200 plus $50 plus $15 for the first year, and then another $400 in June. That's $665 in year one fees, not counting any exam prep costs or legal help with documents.

Ongoing RIA Compliance Requirements in Tennessee

Getting registered is really just the beginning. Tennessee has several ongoing requirements to keep your registration active and stay compliant.

Annual Form ADV Update

Every year, within 90 days of your fiscal year end, you need to file an annual updating amendment to your Form ADV. For most firms operating on a calendar year, that means the amendment is due by March 30. You need to review every answer you gave on the form and update anything that's changed.

If something material changes during the year, you also need to file an other than annual amendment promptly. Don't wait for the annual filing if important information becomes inaccurate. Understanding these RIA compliance requirements at both the state and federal level will help you stay on track.

Renewal

All registrations expire on December 31 each year. You renew through the IARD system, and all fees for both the firm and all IARs need to be paid by that deadline. Miss it and your registration lapses.

Compliance Manual and Written Supervisory Procedures

You need a comprehensive policies and procedures manual tailored to your specific business. This manual should cover everything from how you onboard clients to how you handle complaints, from your trading practices to your information security measures.

You also need a Code of Ethics that addresses conflicts of interest and personal trading by your staff. And you need a Privacy Policy that explains how you protect client information. These aren't just box checking exercises. During an examination, the TDCI will want to see that you actually follow these policies.

If you're using AI tools, robo advisors, or dealing with cryptocurrency products, the Division has specifically called out these areas for heightened scrutiny. So your procedures need to address these risks if they're relevant to your practice. Having the right RIA compliance software can help you maintain these policies and keep your documentation organized.

Books and Records Requirements

Tennessee requires you to maintain detailed records for five years, with the first two years kept in an easily accessible location. This includes things like transaction records, client communications, order tickets, account ledgers, and copies of all written complaints.

If you have custody of client assets, there are even more specific record keeping rules. You need to maintain separate records for each client account showing all deposits, withdrawals, and each client's beneficial interest. Choosing reliable RIA custodians who understand these compliance requirements can make the record keeping process smoother.

Financial Requirements

All Tennessee registered RIAs must maintain a minimum net worth of $15,000 at all times. It's smart to check this at least monthly to make sure you stay in compliance.

The New Continuing Education Requirement

Starting in 2024, Tennessee adopted a continuing education requirement for IARs. Every IAR registered in the state now needs to complete 12 credit hours of CE each year. Six credits have to be in products and practices, and six credits in ethics and professional responsibility.

The deadline is December 31 each year. If you don't complete your CE by the deadline, you'll be marked as CE Inactive in the CRD system. And if you don't fix it by the end of the following year, you won't be able to renew your registration at all.

This is a pretty significant change. It reflects the Division's recognition that the financial services world is changing fast, especially with new technologies and complex products coming to market. Tools like Luthor can help firms keep their marketing and communications in check as these new products emerge, making sure disclosures stay compliant even as the regulatory environment shifts.

Frequently Asked Questions about Tennessee RIA Compliance

How long does it take to get registered as an RIA in Tennessee?

By law, if your application is complete and there are no issues, your registration becomes effective 30 days after filing. But that assumes everything is in order. If the Division has questions or you need to submit additional documents, it could take longer. So build in some buffer time when you're planning your launch.

Does Tennessee have a de minimis exemption?

Yes, but it depends on where you're located. If you don't have an office in Tennessee, you can serve up to five clients in the state without registering. If your main office is in Tennessee, you can have fewer than fifteen clients without registering, as long as you're not advertising to the general public. But remember, if you have custody of client assets, you cannot use the exemption at all.

What are the exam requirements for IARs in Tennessee?

You need to pass either the Series 65 exam, or both the Series 7 and Series 66 exams. The exam requirement is waived if you hold certain professional designations in good standing, specifically CFP, CFA, ChFC, PFS, or CIC.

Do I need a physical office in Tennessee to register?

Having a physical office in Tennessee means you must register with the state, yes. But you might also need to register even without an office if you have more than five clients in the state or if you have custody of any Tennessee client's assets.

What happens if I don't comply?

The consequences can be severe. The TDCI Securities Division has the authority to deny, suspend, or revoke your registration. They can impose civil penalties and refer cases for criminal prosecution. A recent case from March 2025 involving J.D. Frost & Company shows just how aggressive the Division can be when they find violations. In that case, the firm and its principals were accused of raising about $46 million from investors through unregistered securities offerings and fraudulent practices. The Division issued an immediate cease and desist order. So compliance isn't something to take lightly.

Final Thoughts

Tennessee RIA compliance is detailed and multifaceted, but it's definitely manageable once you understand the framework. The key is staying organized, tracking all your deadlines (especially that June 1 Professional Privilege Tax), and building solid policies and procedures from the start.

The regulatory environment is getting more complex, especially around new technologies and products. The TDCI has made it clear they're watching how advisors handle AI, robo advisors, and crypto products. As these areas evolve, having systems in place to review your marketing materials and client communications becomes more important. Working with SEC compliance software can help you stay on top of both state and federal requirements as your practice grows.

If you're looking to reduce compliance risk and streamline how you handle marketing review, Luthor offers an AI based solution that automatically reviews your marketing assets for compliance issues. It can help you tackle marketing compliance at scale, reducing both the time and effort involved in staying compliant as your practice grows. You can request demo access to see how it works for your firm.

Whether you're just starting out or expanding into Tennessee, getting the compliance foundation right will save you headaches down the road. Take the time to understand the rules, build proper procedures, and stay on top of your ongoing obligations. Your future self will thank you.