Recently, it has come to my attention that some state registered investment advisors are not aware that they have an RIA state compliance requirement whereby they need to send an invoice to their clients outlining their management fee, and the calculation of that fee, that is deducted from the client account. Here’s a tip! State registered advisors should review their Form ADV Part 1, Part 1B Item 2.I. Custody and review the four questions under the topic of Advisory Fees. This is the state section of the form that sets forth your RIA state compliance requirements so that you are not deemed to have custody of your client funds because of automatic fee deduction from the client account. I am aware of several state registered RIA firms that have been examined this year by their state regulator, and all of them were asked to produce copies of the invoices they sent to their clients to meet this RIA state compliance requirement. Make sure you are not caught by surprise! Review your RIA state compliance requirements today along with your Form ADV Part 1 and contact Registered Advisor Services if you need assistance with your ongoing compliance requirements.
