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Launching a Registered Investment Advisor firm in Virginia can be a rewarding venture, but the Commonwealth's specific compliance requirements represent a critical first step that can't be overlooked. And the stakes are getting higher.
The investment adviser industry is experiencing pretty remarkable growth right now. The 2024 Investment Adviser Industry Snapshot shows the sector at its peak, with SEC-registered advisers hitting a record 15,870 firms serving an all-time high of 68.4 million clients. Total assets under management bounced back by 12.6% to reach $144.6 trillion. That's a lot of money moving around, and state regulators are paying attention.
This guide is mostly for advisers who'll register with the state. These tend to be smaller operations. On average, a state-registered RIA has just two non-clerical employees, 52 clients, and about $26 million in AUM. The NASAA 2024-25 report shows that 76.4% of state-registered firms have between zero and two people. So if you're thinking about going independent or expanding into Virginia, you're probably not building a massive operation right away.
But small doesn't mean simple when it comes to compliance. State regulators conducted 8,768 active investigations in 2023, resulting in 1,186 enforcement actions. Of those, 404 investigations specifically involved investment advisers and 190 involved investment adviser representatives. Exams frequently turn up issues with compliance policies, fee management, and recommendation suitability.
The message is clear. Compliance isn't just paperwork. It's a core business function with real legal and financial consequences.
Virginia takes a particularly thorough approach. The state requires detailed operational documents upfront, things like cybersecurity policies and disaster recovery plans, right when you apply. This isn't about checking boxes after you're up and running. Virginia wants to see that you're operationally sound before they'll let you start doing business.
In Virginia, RIAs are regulated by the Division of Securities and Retail Franchising within the State Corporation Commission. This state body oversees registration, conducts examinations, and enforces securities laws.
This guide is designed for financial advisors establishing their first independent RIA in Virginia, existing firms expanding into the Commonwealth, and compliance officers who need a solid reference. You'll get a step-by-step understanding of the registration process, a breakdown of fees, and a comprehensive look at ongoing compliance obligations.
Figuring out whether you need to register with Virginia or the SEC is where everything starts. The requirement comes down to three things: your assets under management, how many clients you have in the state, and whether you have a physical office there.
The main factor is your total regulatory AUM. The National Securities Markets Improvement Act of 1996 split oversight between states and the SEC. Generally, if you're managing less than $100 million in AUM, you register with the state where your principal office is located. If you're at $100 million or more, you typically register with the SEC as a federal covered adviser. This guide focuses on state-registered advisers regulated by the Virginia SCC.
If you don't have a physical office in Virginia, there's a de minimis exemption. You can serve a small number of Virginia clients without registering. Specifically, an out-of-state RIA isn't required to register until it has more than five clients who are Virginia residents within any 12-month period.
When you get your sixth Virginia client, the exemption ends and you need to register. Virginia's code requires an affidavit from out-of-state applicants stating they've had fewer than six clients in the prior 12 months.
The third trigger is independent of AUM and client count. If you maintain a physical place of business in Virginia, you have to register with the SCC, even if you have zero clients in the state.
The Uniform Securities Act defines a place of business as an office where you regularly provide investment advice, meet with clients, or any location you hold out to the public as a place where you provide services. This is pretty broad. It includes not just a commercial office, but also a home office that you advertise or use for regular client meetings.
These three triggers work together. A common mistake is focusing on just one. For example, say you're based in Maryland with $30 million in AUM and four Virginia clients. You're fine under the de minimis rule. But if you open a small satellite office in Virginia to better serve those clients, the place of business rule kicks in immediately. The de minimis exemption becomes irrelevant and you need to register. Business decisions like opening an office or launching a marketing campaign that attracts new clients have direct compliance consequences.
Registering an RIA in Virginia involves multiple steps and a lot of documents. The entire process is managed electronically through the Investment Adviser Registration Depository system.
Before you can register, your advisory firm needs to be a formal legal entity. This usually means structuring as an LLC, S-Corporation, or similar. You'll need to file the necessary formation documents with the Virginia SCC's Clerk's Office or the equivalent authority in your home state if you're not domiciled in Virginia.
The core of your application is Form ADV, which you file electronically through IARD. FINRA operates IARD on behalf of state securities regulators, but FINRA doesn't supervise or regulate RIAs.
Form ADV has several parts:
Form ADV Part 1 is the online portion with checkboxes. It contains key information about your firm, including ownership structure, business practices, clients, AUM, and any disciplinary history. Part 1B is specific to state-registered advisers.
Form ADV Part 2A is your client brochure, written in plain English. It details your services, fee schedule, conflicts of interest, risk factors, and business practices. You upload the completed brochure as a PDF to IARD and must deliver it to all prospective and current clients.
Form ADV Part 2B provides information about the specific individuals at your firm who provide investment advice. You need a separate Part 2B for each Investment Adviser Representative, disclosing their education, business experience, professional designations, and any disciplinary history.
Every individual who provides investment advice for your RIA must register as an IAR with Virginia.
Form U4 is the Uniform Application for Securities Industry Registration. You file this electronically through the Central Registration Depository system, which connects with IARD. Form U4 details the individual's employment and disciplinary history.
Exam Requirements are straightforward but strict. To register as an IAR in Virginia, you need to show you passed one of these exam combinations within the two years before applying:
Exam Waivers apply if you hold certain professional designations. The exam requirement is waived for individuals who currently hold and are in good standing with one of these: Certified Financial Planner, Chartered Financial Consultant, Personal Financial Specialist, Chartered Financial Analyst, or Chartered Investment Counselor.
All registration and renewal fees go through IARD. You need to establish and fund a flexible spending account within IARD before you can submit any filings.
This is where Virginia gets really thorough. The Virginia Administrative Code says your application isn't complete until you submit specific documents directly to the SCC. These go beyond standard disclosure and dig into your operational framework:
Virginia's requirement for these operational documents at the initial stage is pretty unusual. Many states might review such documents during your first exam, but Virginia wants them upfront. This means you need to be a fully formed, operationally sound entity before you submit your application, not just an idea on paper. It affects your timeline and startup costs because you can't just file and figure things out later.
For firms dealing with a high volume of marketing materials, tools that help ensure compliance at scale can be valuable. RIA compliance software platforms like Luthor use AI to review marketing assets for compliance issues, which can help reduce the time and effort involved in preparing these materials for submission.
You'll need to budget for both initial and ongoing fees. All fees are paid through your IARD account. Here's what you're looking at:
Firm Registration
Initial Investment Adviser Firm Fee: $200, one-time, payable to FINRA for Virginia
Annual IA Firm Renewal Fee: $200, annually, payable to FINRA for Virginia
Representative Registration
Initial Investment Adviser Rep Fee: $40 per IAR, one-time, payable to FINRA for Virginia
Annual IAR Renewal Fee: $40 per IAR, annually, payable to FINRA for Virginia
Getting registered is one thing. Staying compliant is an ongoing obligation. Virginia has several key requirements to ensure RIAs continue operating in their clients' best interests.
All registered RIAs must file an annual updating amendment to Form ADV. You submit this through IARD within 90 days of your fiscal year-end. The purpose is to keep all information on file with regulators current and accurate, particularly your AUM.
Registration for both your RIA firm and associated IARs expires on December 31 each year. The renewal process happens through IARD during the final quarter and requires payment of the annual renewal fees.
Virginia law mandates that every RIA establish, maintain, and enforce a written compliance manual tailored to its specific business model. This isn't a generic template you download. It's a living document that guides your operations. Understanding RIA compliance requirements at both the state and federal level is essential for building an effective compliance program. The manual must address:
Supervision: The procedures for supervising IARs. This includes written approval of each new client account opening, frequent examination of client accounts to detect irregularities, and prompt review of all advisory transactions and client correspondence.
Code of Ethics: Your firm must adopt a Code of Ethics outlining its commitment to fiduciary duties and establishing procedures to identify and mitigate conflicts of interest. These standards align with broader SEC RIA compliance expectations for registered investment advisers.
Cybersecurity and Privacy: As required at registration, you must maintain and enforce policies to protect client data and firm systems from cyber threats.
Business Continuity Plan: You need procedures to ensure you can continue operating and serving clients during a significant disruption.
One requirement stands out. Virginia's supervision rule mandates an annual, independent physical inspection of each business office. This creates an operational challenge that runs counter to modern remote work trends. The IAA's 2024 report noted the continued rise of advisers operating from private residences. Virginia's regulation is in tension with this trend. If you have several IARs working from their registered home offices across the Commonwealth, you'll need to plan and budget for multiple, separate physical inspections each year. Firms planning a decentralized model in Virginia need to carefully consider the logistical and financial implications, as it may influence hiring strategy and office structure.
The Virginia Administrative Code provides extensive rules about the books and records RIAs must create and maintain. These requirements align closely with the NASAA Model Rule on Recordkeeping. Required records include:
These records must generally be maintained in an easily accessible place for at least five years, the first two of which must be in your principal office.
Virginia imposes minimum financial requirements on RIAs that have custody of client assets or certain billing practices. When evaluating your business structure, it's worth understanding how different RIA custodians handle custody arrangements and what that means for your net capital requirements. If you have custody of client funds or securities, or if you require prepayment of advisory fees of $500 or more per client, six months or more in advance, you must maintain a minimum net worth of at least $25,001. If your net worth falls below this threshold, you're required to obtain and maintain a $25,000 surety bond. For firms with discretionary authority but no custody, a lower minimum net capital requirement of $10,000 may apply.
Managing ongoing compliance documentation, particularly advertising materials and client communications that must be retained, can be time-consuming. Automated compliance review tools can help firms maintain organized records and flag potential issues before they become problems during an examination.
Under the Virginia Administrative Code, the SCC is required to either grant or deny a registration application within 30 days after a complete application is filed. However, the commission can extend this review period by up to 90 days if it needs additional time to obtain or verify information. You can also request an extension. The key to an efficient approval is submitting a complete and accurate application, including all Virginia-specific documents, from the start.
Yes. An out-of-state investment adviser without a place of business in Virginia is exempt from registration as long as it has five or fewer clients who are Virginia residents during any preceding 12-month period. The registration requirement kicks in immediately when you take on your sixth Virginia client.
An individual seeking to register as an IAR in Virginia must have passed either the Series 65 exam or the combination of Series 7 and Series 66 exams. This requirement is waived for individuals who hold certain professional designations, such as CFP, CFA, ChFC, PFS, or CIC, and are in good standing with the issuing organization.
No, a physical office in Virginia isn't required for registration. An out-of-state firm can trigger the registration requirement solely by exceeding the five-client de minimis threshold. But if you do establish a place of business in Virginia, you must register with the SCC, regardless of client count.
Establishing and operating an RIA in Virginia requires understanding a regulatory framework that emphasizes operational readiness, strong supervisory structures, and consistent adherence to fiduciary duties. The key pillars are understanding the specific registration triggers (AUM, de minimis standard, and place of business), preparing a comprehensive application that includes all state-mandated operational documents, and maintaining ongoing commitments to supervision, recordkeeping, and financial stability. Virginia's regulatory approach makes it clear that a new RIA is expected to be a fully functional enterprise from day one.
The compliance burden is real, and it starts before you even file your application. Between the operational documents required upfront, the detailed supervisory procedures, the annual physical office inspections, and the extensive recordkeeping obligations, Virginia's requirements demand both time and attention. For smaller firms or solo advisers, this can feel overwhelming.
But compliance doesn't have to slow you down. The reality is that many compliance tasks, particularly around reviewing and managing marketing materials and client communications, can be streamlined with the right tools. Registered investment advisor software designed for compliance can help automate routine reviews and flag potential issues before they become problems. Luthor is an AI-based platform designed to help RIAs automatically review marketing assets for compliance. You can reduce the risk, effort, and time it takes to tackle marketing compliance at scale. Whether you're preparing your initial application materials or managing ongoing advertising requirements, having a system that helps you catch potential issues early can make a real difference.
If you're ready to launch your RIA in Virginia or need help getting your compliance house in order, request demo access to see how Luthor can support your firm's compliance needs.