Resources · Registration Decision Guide
RIA vs. ERA
Registered Investment Adviser or Exempt Reporting Adviser? The answer is driven less by your assets than by who your clients are. Here is the decision framework we run with every new firm.
The short version: if any client is a person or a separate account, you register as an RIA. If every client is a pooled vehicle and private fund assets stay under $150M — or every fund is a qualifying venture capital fund — you can file as an ERA instead.
Four questions that settle it
- 1
Will any client be an individual or a separate account?
If yes, the ERA exemptions are off the table — both are limited to pooled vehicles. You register with the SEC or your state and stop here.
- 2
How much will you manage in private fund assets?
Under $150M in private fund regulatory AUM keeps the private fund adviser exemption available. At $150M you must apply for full SEC registration, generally within 90 days of the annual updating amendment that reports the amount.
- 3
Are all of your funds qualifying venture capital funds?
VC-only advisers are ERA-eligible with no asset cap under Rule 203(l)-1 — but every fund must keep meeting the definition, including the 20% non-qualifying investment basket and no ordinary redemption rights.
- 4
Do your LPs, custodians, or platforms require registered status?
Some institutional allocators, custodians, and distribution platforms will only work with registered advisers. That commercial requirement often decides the question before the thresholds do.
Which profile sounds like your firm?
Register as an RIA
Retail / SMA investment adviser
- You will manage separate accounts or provide financial planning to individuals
- You want to charge an asset-based advisory fee to non-fund clients
- You are a breakaway advisor bringing household relationships with you
- Private fund assets are already near or above $150M
- A custodian, platform, or institutional client requires registered status
- You will hold discretion over client assets held at a custodian
File as an ERA
Exempt reporting adviser to pooled vehicles
- Every client will be a fund, SPV, or other pooled vehicle
- Total private fund assets will stay under $150M for the near term
- You advise only qualifying venture capital funds (no asset cap)
- You have no retail or SMA clients and do not plan to take any
- You want the fastest, lightest path to a first close
- You accept that most LPs will still diligence you like a registered adviser
Side-by-side comparison
| Factor | Registered Investment Adviser | Exempt Reporting Adviser |
|---|---|---|
| Who you advise | Individuals, SMAs, institutions, and/or funds | Pooled vehicles only — no separate accounts |
| Asset threshold | State under $100M · SEC at $110M+ (elective $100–110M) | Under $150M private fund RAUM, or VC-only with no cap |
| Form ADV | Parts 1A, 1B (state), 2A, 2B + Form CRS (SEC retail) | Limited Part 1A items only — no brochure, no CRS |
| First filing deadline | Before holding yourself out / taking clients | Within 60 days of relying on the exemption |
| Compliance program | Required — Rule 206(4)-7, written manual, named CCO | Not required by rule; expected by allocators |
| Code of Ethics | Required — Rule 204A-1, personal trading reporting | Not required; insider-trading policy still advisable |
| Books & records | Full Rule 204-2 recordkeeping | No Rule 204-2 obligation; fund records still needed |
| Annual review | Required annually in writing | Not required; recommended for ODD |
| Custody rule | Rule 206(4)-2 — surprise exam or audited financials | Not applicable; fund audit still market standard |
| Performance fees | Each investor must be a Qualified Client | Same Qualified Client test applies to fund investors |
| SEC examination | Yes — routine and risk-based exams | Yes — SEC has examined ERAs since 2016 |
| State treatment | Notice filings or full state registration | Varies — some states require full registration |
| FIN Group setup | From $4,895 (SEC or state) | From $3,095 plus fund formation costs |
| Ongoing support | From $295/mo (state) · $395/mo (SEC) | From $1,250/mo (private fund tier) |
Thresholds reflect the Investment Advisers Act of 1940 and current SEC rules. State ERA treatment differs — a handful of states require full registration regardless of federal exempt status. See our state filing fee database.
When an ERA outgrows the exemption
The $150M crossing. Once private fund RAUM reaches $150M you file a full Form ADV application — Parts 1A, 2A, 2B — and adopt a Rule 206(4)-7 compliance program, a Code of Ethics under Rule 204A-1, Rule 204-2 books and records, and custody-rule procedures. Plan 90 days, not 30.
Taking a single SMA. Accepting one separate account or advisory client breaks the private fund adviser exemption immediately. This is the most common accidental conversion we see.
A fund drifting out of the VC definition. Secondaries, excessive leverage, public holdings beyond the 20% basket, or granting redemption rights can disqualify a fund and with it your VC exemption.
Adding a co-advised or sub-advised mandate. Sub-advisory arrangements with registered advisers frequently require registered status contractually, even where the exemption technically still holds.
Free setup checklists for either path
Pick the one that matches your direction — both are printable PDFs, sent by email.
Frequently asked questions
What is the difference between an RIA and an ERA?
A Registered Investment Adviser (RIA) is fully registered with the SEC or one or more states and files all of Form ADV — Parts 1A, 1B (state), 2A, 2B, and Form CRS where applicable. An Exempt Reporting Adviser (ERA) is not registered: it relies on the private fund adviser exemption (under $150M in private fund assets) or the venture capital fund adviser exemption, and files only a limited subset of Form ADV Part 1A. ERAs cannot advise retail separate accounts.
Can I be an ERA if I manage separate accounts for individuals?
No. Both ERA exemptions are limited to pooled vehicles. The private fund adviser exemption (Rule 203(m)-1) requires that your only U.S. clients are qualifying private funds, and the venture capital exemption (Rule 203(l)-1) requires that every client is a qualifying venture capital fund. One retail separately managed account breaks the exemption and pushes you into full SEC or state registration.
At what point does an ERA have to register with the SEC?
A private fund adviser ERA must register once private fund regulatory assets under management reach $150M, with an application generally required within 90 days of the annual updating amendment reporting that amount. A venture capital ERA has no asset cap, but loses the exemption if a fund stops meeting the VC fund definition — for example by exceeding the 20% non-qualifying investment basket or offering redemption rights.
Do ERAs still get examined and have compliance obligations?
Yes. ERAs are subject to SEC examination, the Advisers Act antifraud provisions including Rule 206(4)-8 on statements to fund investors, the Marketing Rule as applied to them, pay-to-play Rule 206(4)-5, Form D and Blue Sky filings, and, for advisers, FinCEN's AML/CFT program rule effective January 1, 2028. ERAs are not required to have a full Rule 206(4)-7 compliance program or a chief compliance officer, but most institutional allocators expect a written program anyway.
Can a firm be an RIA and run private funds at the same time?
Yes, and it is common. Once you have any non-fund client, or once fund assets cross $150M, you register as an RIA and your funds simply become advisory clients disclosed in Form ADV. You cannot hold both statuses at the SEC level at the same time — you are either registered or exempt — though a registered adviser can still rely on state ERA notice-filing treatment in some states.
Which is cheaper to launch — an RIA or an ERA?
ERA setup is lighter on the filing side (from $3,095 at FIN Group), but the fund itself carries the real cost: offering documents, administrator, auditor, and bank onboarding. Full RIA registration is from $4,895 and includes Form ADV Parts 1, 2A, 2B, Form CRS, the compliance manual, Code of Ethics, privacy policy, and BCP. Ongoing compliance support starts at $295/month for a state RIA and $1,250/month for a private fund firm.
Try our other free tools
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3 minutesStill not sure which one you are?
Send us your client mix, expected assets, and launch date. We will tell you which filing path applies, what it costs, and how long it takes — RIA registration from $4,895, ERA setup from $3,095, ongoing compliance support from $295/month.
Educational content only — not legal advice. Confirm your registration path with counsel before filing.