registered Investment advisor startup Guide
A guide to owning and operating your own investment firm.
Thinking of becoming a Registered Investment Advisor?
One of the ﬁrst steps to making a decision is business development, technology and
determining the right business model for you back-ofﬁce support, and investor solutions.
and your clients. If you have an entrepreneurial All of which are supported by the products,
spirit and you want to build your own business services, and vast experience of Fidelity
while helping others manage their Investments.
investments, then becoming a Registered
This reference guide will be particularly helpful
Investment Advisor (RIA) may be a great
during the ﬁrst six to 12 months of launching
career decision for you.
and building your own business and will
If you are ready to make the move, Fidelity provide the following information:
Institutional Wealth Services (Fidelity) can help
• Stages of becoming a successful RIA
you every step of the way. Through the
Fidelity Transition Solutions program, an • The Fidelity products and services available
experienced and knowledgeable team can to support your business
help you navigate your way through the four
• Worksheets to assist you in preparing to
critical areas to becoming an RIA, including
open your advisory practice
business consultation services, marketing and
Stage 1: Making the commitment
2 FIDELITY INSTITUTIONAL WEALTH SERVICES
Understanding the potential ﬁnancial, legal, and professional obligations is key
to determining if becoming an RIA is the right next step toward independence.
1.1 Exploring a new career . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.2 Understanding the potential beneﬁts
of becoming an RIA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.3 Knowing the challenges of becoming an RIA . . . . . . . . . . . . . . . . . . . . . 5
1.4 Making the transition and understanding
your qualiﬁcations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.5 Analyzing the ﬁnancial implications of
becoming an RIA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.6 Developing a business plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
1.7 Starting your ﬁrm with conﬁdence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
REGISTERED INVESTMENT ADVISOR STARTUP GUIDE 3
1.1 Exploring a new career THE ROLE OF AN RIA
Now that you’re considering a career as an RIA, Investment professionals who perform the following
you have taken the ﬁrst step to opening your own activities may need to become RIAs, and register
business. Through the Fidelity Transition Solutions any existing or proposed ﬁrm with the Securities
program, we have the knowledge and experience and Exchange Commission (SEC) or the appropriate
to help you. Whether you have decided to leave an state(s):
existing ﬁrm or you are an independent professional
• Rendering ﬁnancial planning or investment
interested in becoming an RIA, the RIA Startup
advice about securities, or managing a portfolio
Guide offers you a detailed overview of four stages
you may want to consider when opening and
operating your own investment ﬁrm as an RIA: • Receiving compensation for this planning or advice
• Stage 1 — Making the commitment • Holding oneself out to the public as offering
• Stage 2 — Deﬁning your business entity
As you might imagine, the regulations deﬁning and
• Stage 3 — Preparing your organization governing the practice of an RIA are quite complex
• Stage 4 — Managing and growing your practice and signiﬁcant. That’s why it is advisable for you to
with Fidelity support seek the advice of a professional such as an attorney
The RIA Startup Guide provides useful information or registration and compliance consultant who is
on each of these topics, as well as a detailed timeline knowledgeable in this ﬁeld.
to help you plan each stage of your business over the See Stage 2: Deﬁning your business entity for more
ﬁrst six to 12 months — from development and setup detailed information.
time to the ﬁrst few months of operation.
We know you’ll have questions and concerns as you
move forward. Guided by a dedicated Fidelity team,
we will work with you and provide the ongoing
support you can rely on to help you succeed. As
you take charge of building your business, you can
rely on the expertise we have developed to help
professionals like you make a smooth transition to
managing a successful RIA ﬁrm.
4 FIDELITY INSTITUTIONAL WEALTH SERVICES
1.2 Understanding the potential 1.3 Knowing the challenges of
beneﬁts of becoming an RIA becoming an RIA
Becoming an RIA may enable you to take control of Once you have committed to starting your own
your future and gain the satisfaction that comes from RIA ﬁrm, there are a number of building blocks that
helping investors meet their ﬁnancial goals, while can help you make your new enterprise a reality.
building your own ﬁrm. These include:
There are many other potential beneﬁts depending • Understanding your qualiﬁcations
on your speciﬁc background, your current situation, • Realizing the ﬁnancial implications of your decision
and areas of interest. These may include:
• Completing a detailed business plan
• Linking your success directly to the success of your
• Creating a detailed timeline of activities — with
completion dates included
• Serving your clients in a new way by helping them
understand and achieve their ﬁnancial goals
• Developing deeper client relationships by offering
more services, and thereby extending your business
• Developing and customizing your investment
skills to focus on the types of investments you like
• Gaining the ﬁnancial freedom of knowing your
personal income is determined by how well you
manage revenue generation and expense controls
• Sitting in the driver’s seat when it comes to making
decisions that you believe to be right for you and
• Developing your brand, protecting your reputation,
and strengthening client trust
REGISTERED INVESTMENT ADVISOR STARTUP GUIDE 5
1.4 Making the transition and Obtain your clients’ authorization to transact
understanding your qualiﬁcations business in their brokerage accounts in order to
manage their portfolios.
To help make your transition to becoming an RIA
as smooth as possible, we’ve created the following Consider your clients’ portfolios that are invested
checklists for your review. The checklists have been in proprietary securities, and the tax or expense
designed to help give you more conﬁdence as you implications of liquidating them.
start your own RIA ﬁrm. You can review the list
Know the types of assets that you can easily transfer
applicable to your speciﬁc situation, and take the
from one ﬁnancial institution to another.
steps necessary to address any particular issues.
Understand that, if you are leaving a bank trust
Established investment professionals
environment, the broker/dealer you select will be
If you are currently an established investment
responsible for clearing, custodying, and executing
professional and are leaving your present ﬁrm
transactions pertaining to your clients’ assets.
to become an RIA, make sure you:
Check with your legal advisor before you seek
Understand the terms of any non-compete
startup capital, especially if you are currently
agreement you may have with your current
licensed with a broker/dealer.
ﬁrm, as well as any conﬁdentiality agreement.
Know how to establish credit, from securing business
Consider your options to realistically understand
loans to applying for a company credit card for travel
promissory notes, training expenses, and other
and other expenses.
obligations with your current ﬁrm.
Ensure that you have appropriate ﬁduciary
Realize the time to establish your RIA business
may be longer than anticipated.
Understand the implications of transitioning
from commissions to a fee-based business (e.g., how
to deal with trailer fees and annuities, and your
6 FIDELITY INSTITUTIONAL WEALTH SERVICES
Certiﬁed public accountants (CPAs) AS A REGISTERED INVESTMENT ADVISOR
and other noninvestment professionals YOU WILL HAVE NEW RESPONSIBILITIES.
If you are a CPA or other noninvestment professional, BE PREPARED FOR THEM.
make sure you:
Your new RIA business will include tasks you may
Understand the costs involved in transitioning not be familiar with. These may include:
becoming an RIA.
toto becoming an RIA. • Managing and monitoring multiple accounts
Learn how to balance your time between your • Trading and reconciling accounts efﬁciently
• Maintaining client histories
responsibilities an RIA and your present
responsibilities asas an RIA and your present
• Meeting regulatory guidelines
professional duties, you have decided to do both.
professional duties, if if you have decided to do both
• Reporting investment performance to clients
• Supplying back-ofﬁce management of accounts
• Overseeing the marketing of services
• Executing a marketing plan and creating
• Managing employees
Your dedicated and knowledgeable Fidelity
team can help guide you through these tasks
by providing you the experience of client
management, while supplying products and
services that may make managing your client base
easier — and helping your ﬁrm get noticed in the
marketplace with more impact.
REGISTERED INVESTMENT ADVISOR STARTUP GUIDE 7
1.5 Analyzing the ﬁnancial If you want to start a ﬁrm that supports both
implications of becoming an RIA fee-based and commission income streams (also
known as a hybrid model), registration is required
As you may already know, starting your own RIA
with the SEC and the Financial Industry Regulatory
business can be a rewarding experience — both
Authority (FINRA) for commission-based business.
personally and professionally. However, it also may
Additionally, you will need to afﬁliate with a broker/
have ﬁnancial implications you need to consider.
The sample Financial Worksheet on page 12
is designed to help you analyze the ﬁnancial 1.6 Developing a business plan
implications of starting your own RIA business. The
Once you are conﬁdent that becoming an RIA is
worksheet can help enable you to assess your startup
a ﬁnancially sound career choice for you, you can
costs, your ongoing costs, and also help you forecast
begin to develop a business plan and establish critical
proﬁt and loss. Talk to a Fidelity representative about
milestones for your ﬁrm. While business plans are as
the economics and other considerations and have
individual as you are, we recommend that your plan
your worksheet reviewed by your accountant, lawyer,
include the following ﬁve components:
and other advisors. If, for example, you are seeking
startup capital, you must be able to justify your Service model. Include the types of services you
ﬁnancial projections. want to provide for your clients at the start and as
you grow. For example:
Part of analyzing your ﬁnancials includes choosing a
pricing structure. Assess your clientele and develop a • Comprehensive ﬁnancial planning
pricing structure that conforms to their expectations.
• Estate and retirement planning
Three common methods for developing a pricing
structure are: • General portfolio management
Target market. To focus your business activities
• Percentage of assets
effectively, you should clearly deﬁne the type of
• Hourly billing clients you want to handle now and in the future.
• Flat fee billing Here are a few characteristics you may want to
RIAs typically assess a fee based on assets under
management. There are several advantages to this • Investment goals and needs
arrangement, including: • Minimum amount of assets available for investment
• The opportunity to tie your compensation directly • Age and geographic location
to the growth of your clients’ assets
• Service needs
• The ability to establish breakpoints, which can
encourage clients to concentrate assets with you
8 FIDELITY INSTITUTIONAL WEALTH SERVICES
Strengths. Know your strengths and write Timeline. A detailed timeline of your business setup
them down. This can help you stand out from and operation will prove invaluable. Once you decide
the competition in your community. It may be on a target date for opening your RIA ﬁrm, use
advantageous to determine: the timeline chart provided in this chapter to help
develop a detailed plan for meeting that date.
• Why you will be in a position to satisfy the needs
of your speciﬁc target market This timeline chart can assist you in starting and
• What skills you have to offer clients that your operating your ﬁrm efﬁciently and effectively. If
competition cannot you are already working closely with a Fidelity
representative, consider sharing your business plan
• What value-added services you can provide with them for additional insights they may be able
Marketing plan. Once you know which services you to provide you.
want to provide and who your ideal clients are, you
can begin to develop a plan to market your services. 1.7 Starting your ﬁrm with conﬁdence
Consider a variety of marketing activities, including
You’ll beneﬁt from seeing your plans, costs, and
seminars and direct mailings to promote your ﬁrm
estimated income in black and white. Use the
in the marketplace. You might also want to include
following worksheets to assist you in preparing
a discussion of opportunities to network and/or gain
to open your business as an RIA.
referrals* from business associates and other clients.
In this section you would also include a description
or prototype of the marketing materials you will be
using, such as:
• Business letters
• Brochures and other direct mail
• Web site and online marketing materials
* Be aware that the direct or indirect payment of a referral fee may trigger SEC or state regulations, and ensure that both you and your referral
sources clearly understand these regulations before you offer to pay a referral fee. You may want to consult someone knowledgeable about
such regulations, such as an attorney or compliance consultant.
REGISTERED INVESTMENT ADVISOR STARTUP GUIDE 9
Activity timeline worksheet Create a plan to help you organize the launch of your ﬁrm.
BEFORE YOU OPEN
>6 6 5 4 3 2
months months months months months months
Consider the benefits of becoming an RIA ■
Consider your business capital needed ■
Transition issues Consider the transition issues ■
STAGE 1 — MAKING THE COMMITMENT TO BE AN RIA
Determine a target date for the official opening of your business ■
Start writing a business plan ■
Think about how and when you will leave your firm ■
Understand the terms of any non-compete agreement you may have with
Transition issues your current firm
Develop an operations guide governing account transfers, openings,
Office setup Begin looking for office space ■ ■
Custodian Begin looking for a custodian/service agent ■ ■
Determine the need for and costs of errors and omissions insurance and
Insurance other insurance. If you have employees, make sure you have all federal ■ ■
and/or state-mandated insurance.
Obtain your Employer Identification Number (EIN) and work with your
Payroll accountant to determine needs for state/city/local tax purposes
Determine how payroll will be handled with your accountant ■ ■
Discuss with your accountant the types of benefits you want to provide
Benefits ■ ■
for yourself and any current or future employees
STAGE 2 — DEFINING YOUR BUSINESS ENTITY
Prepare Form ADV with professional help ■ ■
File Form ADV with the SEC, or a comparable form with the state* ■
Develop compliance policies and procedures to ensure that your firm
is in compliance with the applicable SEC or state requirements. You
could consider ordering compliance materials from a registration and
STAGE 3 — PREPARING YOUR ORGANIZATION
Talk to a custodian/service agent about the services they can provide.
Understand the process involved in the asset transfer.
Custodian Begin preparing for the transfer of assets ■ ■
Obtain account forms and transfer forms ■
Determine your investment selection ■
Lease office space ■
Order computer, portfolio management and business software,
Office setup Set up telephone and Internet provider services ■
Purchase or lease furniture ■
Order office equipment (e.g., telephone, answering machine, fax
machine, copy machine, etc.)
Begin Web site development ■ ■
Marketing Order design of business card, letterhead, envelope, and client
Start search for assistant if necessary ■
Hire assistant to start on day one ■
Work with your attorney or HR consultant to be sure you are compliant
Wage & hour laws ■ ■
with all federal and state regulations
*Depending on the state, registration may take up to three months or more.
10 FIDELITY INSTITUTIONAL WEALTH SERVICES
BEFORE YOU OPEN AFTER YOU OPEN
1 2 1 0 1 2 1 3
month weeks week week week weeks month months
STAGE 3 — PREPARING YOUR ORGANIZATION (CONT.)
Obtain compliance reference materials to keep updated on the
latest compliance requirements
Determine a target date for the official opening of your business ■
Marketing Prepare a list of clients and prospects ■
Compile mailing list and prepare envelopes or labels ■
Technology Review procedures and software offered by custodian/service agent ■ ■ ■
Install computers, software, peripherals, etc. ■
Install portfolio management, financial planning, and
Office setup ■
Finalize details on office space ■
Staffing Set up appropriate employee files ■
Prepare client mailings ■
Marketing Prepare press release or advertisement announcing opening of
your new business
STAGE 4 — MANAGING YOUR BUSINESS
Run your ad and press release ■
Compare actual expenses versus pro forma ■
Custodian Start transfer of assets to custodian ■
Launch Web site ■
Organize a reception for your clients ■
Marketing Send thank you notes to clients who have transferred their
accounts to you
Follow up on clients who have not yet returned transfer forms ■
STAGE 5 — ONGOING DEVELOPMENT
Develop marketing plan and create marketing campaigns to
promote your new business
Consider professional organizations to join ■
Professional Consider conferences, seminars, training courses to attend ■
development Join professional organizations ■
Attend conferences, seminars, and training courses ■
Consider research materials you need for investment decisions
Investment decision ■
(e.g., Internet, research reports, etc.)
Note: This timeline worksheet is intended only as a guideline for developing a detailed plan for setting up your business. Depending on where you are
in the transition process, your time frames may be longer or shorter than what is illustrated on this worksheet. You may need to use it in conjunction with
The information contained in this timeline worksheet is general in nature and is provided for informational purposes only. Fidelity Investments is providing
this worksheet as a service to your ﬁrm. You are responsible for evaluating your own practice and making appropriate decisions for your ﬁrm. Those decisions
may be based on these and other factors you deem relevant. This worksheet is not meant to be exhaustive of all possible options you may consider. Fidelity
Investments is not responsible for your action or inaction as a result of this service.
REGISTERED INVESTMENT ADVISOR STARTUP GUIDE 11
RIA startup ﬁnancial worksheet
Use this worksheet to help estimate your startup and ongoing costs. It may be useful to compare what you currently earn with
your potential earnings as an RIA. Discuss these costs with your Fidelity representative to understand how to prepare ﬁnancially.
EXPENDITURE YOUR ESTIMATES
Initial cost Annual
Advisory Staff (FTE) ■ ■
Junior Advisors ■ ■
Payroll Tax & Retirement Contribution ■ ■
Business Entity Formation ■
Employment Contracts and Exit Strategy ■
SEC Registration ■
ADV Preparation ■ ■
Registration Client Contracts ■ ■
Compliance Manual ■ ■
License Transfer ■ ■
Business Liability ■ ■
Errors and Omissions (E & O) ■ ■
Health Benefits ■ ■
Additional Family Member ■ ■
Rent Expense ■ ■
Tenant Improvement (paint, wiring, walls, etc.) ■
Miscellaneous/Office Supplies ■ ■
General Marketing Costs ■ ■
Web Site Design ■
Additional Monitor ■
Office Printer ■
Equipment Uninterruptible Power Supply ■
Scanner (Document Maintenance) ■
Other Tech Supplies ■ ■
IT and Network Maintenance Services ■
Phone System ■
Network Backup Drive & Monthly Fee ■ ■
12 FIDELITY INSTITUTIONAL WEALTH SERVICES
EXPENDITURE YOUR ESTIMATES
Initial cost Annual
Financial Planning Software (NaviPlan
MS Office Suite ■ ■
Portfolio Management Software (WealthCentral) ■ ■
CRM System (WealthCentral) ■ ■
Financial (QuickBooks ) ■ ■
Anti-Virus (budget per FTE) ■ ■
E-mail Compliance System ■ ■
Document Maintenance System (Server) ■ ■
Document Maintenance System (User) ■ ■
Network Backup Software (budget per FTE) ■ ■
Stationery (budget per FTE) ■ ■
Internet Service (monthly) ■ ■
Office Utilities ■ ■
Other office Backup and Disaster Recovery Plan ■
Postage Machine and Meter Rental (monthly) ■
Monthly Phone Charges ■ ■
Monthly Postage ■ ■
TOTAL CASH OUTLAY FOR FIRST YEAR *
*Transfer this total to the “First-year business cost” row below, in the “Projected as an RIA” column.
Proﬁt and loss worksheet
Understanding the risks involved in starting and running your ﬁrm can help you make informed decisions
PROFIT AND LOSS
PROFESSION AS AN RIA
Assets retained (%)
Gross production (%)
First-year business cost †
Profit and loss
From “Total cash outlay for ﬁrst year” in the table above.
The information contained in these ﬁnancial worksheets is general in nature and is provided for informational purposes only. Fidelity Investments is providing
these worksheets as a service to your ﬁrm. You are responsible for evaluating your own practice and making appropriate decisions for your ﬁrm. Those
decisions may be based on these and other factors you deem relevant. These worksheets are not meant to be exhaustive of all possible options you may consider.
You may need to consult a professional such as an accountant. Fidelity Investments is not responsible for your action or inaction as a result of this service.
REGISTERED INVESTMENT ADVISOR STARTUP GUIDE 13
Stage 2: Deﬁning your business entity
14 FIDELITY INSTITUTIONAL WEALTH SERVICES
Setting up your business can be made easier with the Fidelity Transition Solutions
program — designed to help you meet your goals and the federal and state guidelines
for starting and running your business.
2.1 Establishing yourself — and your ﬁrm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.2 Abiding by professional ethics and standards . . . . . . . . . . . . . . . . . . . . . . . . 16
2.3 Understanding registration and compliance . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.4 Choosing the form of organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.5 Understanding the scope of registration . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
2.6 Preparing Form ADV and drafting your disclosure statement . . . . . . . . . . . 21
2.7 Creating a client agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.8 Regulatory ﬁlings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
2.9 Electronic ﬁlings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.10 State notice ﬁlings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.11 Representative qualiﬁcations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
2.12 Written supervisory procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.13 Other elements of the compliance foundation . . . . . . . . . . . . . . . . . . . . . . . 24
2.14 Managing risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
2.15 Getting the counsel you need . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
REGISTERED INVESTMENT ADVISOR STARTUP GUIDE 15
2.1 Establishing yourself — Laws and regulations. Make sure that you fully
and your ﬁrm understand the state and federal laws and regulations
affecting your practice. Take steps to ensure that
Serving as an RIA requires you — and the members
everyone in your business avoids any conduct or
of your ﬁrm — to adhere to particular professional
activities that would violate any of these regulations.
ethics and regulation requirements. Many of these
rules change over time and vary from state to state, Advisor’s code of ethics. Rule 204A-1 requires each
so you should always verify that you have current advisor’s code of ethics to set forth a standard of
information. You may want to consult your business business conduct that the advisor demands of all
advisors, such as an experienced attorney or a its supervised persons. The rule does not require
registration and compliance services company, to the advisor to adopt a particular standard, but the
address all possible issues. standard chosen must reﬂect the advisor’s ﬁduciary
obligations and those of its supervised persons, and
2.2 Abiding by professional ethics must require compliance with the federal securities
and standards laws. A full copy of Rule 204A-1 can be found at
Your clients place great trust in the services you provide
as an RIA, and rely on your sound ﬁnancial guidance. Diligence. You should be diligent in performing
Abiding by the highest standards of professional business duties for your clients.
ethics and integrity will be essential to your long-term
Honorable relationships. You should maintain
success. Here are some points to consider in developing
honorable relationships with clients, with other
the ethical standards for your ﬁrm:
investment professionals, and with all those who rely
The clients’ interests are paramount. It is important on your professional skills and judgment.
to keep in mind the trust your clients place in you.
An informed public. You should seek to enhance the
Always hold your clients’ interest above your own.
public’s understanding of the RIA business.
The ﬁeld is always changing. The investment
Integrity. Through proper conduct and the exercise
business is a complex and ever-changing ﬁeld. It
of good judgment, you demonstrate the value of your
is important that you maintain and improve your
service to the public.
professional knowledge and skills. Also, offer
Note: This chapter is intended as a general information resource,
investment advice only in those areas in which you
and the contents do not constitute and should not be construed
and your associates have professional competence. as legal advice or legal opinion.
The content provided in this section has been prepared and reviewed with the assistance of third-party providers, including The Law Ofﬁces
of Patrick J. Burns, Jr., P.C., and Advanced Regulatory Compliance, Inc., a legal, regulatory, and compliance services organization dedicated
to assisting independently registered investment advisors with their legal and regulatory needs.
These third-party providers are independent organizations and are not afﬁliated with Fidelity Investments.
16 FIDELITY INSTITUTIONAL WEALTH SERVICES
2.3 Understanding registration 2.4 Choosing the form
and compliance of organization
When it comes to running your RIA business, good Federal and state securities regulators allow both
compliance is good business. The federal and state individuals and entities to register as investment
laws, rules, and regulations governing investment advisors. Without forming a separate entity, a
advisors limit an advisor’s ability to hedge his or prospective advisor is more likely to subject his or
her liability. her personal assets to liability. Accordingly, the choice
to form a separate legal entity should receive special
One defense against liability and regulatory violations
consideration because it may allow an advisor to:
is to implement clear and concise disclosure along
with an integrated set of structural documents, legal • Provide greater protection of personal assets
agreements, and internal policies and procedures • Limit disclosure of personal information
based upon industry best practices as they apply
to your speciﬁc business as an RIA. • Take advantage of sophisticated tax strategies
• Utilize advanced strategies for succession planning
• Provide legitimacy in the eyes of prospective clients
Those about to register as investment advisors may
want to consider whether a separate entity (apart from
an existing entity) should be established. For example,
if an existing business entity is also a broker/dealer or
an insurance agency, investment advisor registration
may subject the entire ﬁrm to more rigorous record-
keeping requirements. Registering as a separate entity
may simplify recordkeeping.
REGISTERED INVESTMENT ADVISOR STARTUP GUIDE 17
Forms of organization
The following table provides an overview of the various types of entities you, as a prospective advisor, may want to consider,
and some of the corresponding characteristics of each. You should discuss these choices with your legal counsel, compliance
consulting company, or other professional.
SOLE GENERAL LIMITED LIABILITY LIMITED
PROPRIETORSHIP PARTNERSHIP COMPANY PARTNERSHIP
Filing None None Yes Yes Yes Yes
Recommended None None Operating Shareholders Shareholders Limited partnership
structural agreement agreement agreement agreement
Dissolved by the Dissolved by the Perpetual or limited Perpetual Perpetual Perpetual or limited
Duration death of the sole death of partner, to a fixed amount to a fixed amount
proprietor or bankruptcy of time of time
Sole proprietor has Partners have Members are Shareholders are Shareholders are Limited partners are
unlimited personal unlimited not personally liable not personally not personally not personally liable
liability personal liability for the debts of liable for the debts liable for the debts for the debts of the
Typical the limited liability of the corporation of the corporation limited partnership
The general partner
of liability is personally liable
for the debts of the
None None Some formal Formality of board Formality of board Some formal
requirements but of directors, officers, of directors, officers, requirements but
Formalities less formal than annual meetings, annual meetings, less formal than
corporations and annual reporting and annual reporting corporations
Full control of Each partner has an Each member Board of directors Board of directors The general partner
all management and equal voice unless may have varying governs the governs the may exercise
operations agreed otherwise responsibilities corporation and corporation and management
appoints officers appoints officers responsibilities,
Management to manage to manage while limited
not share in any
Sole proprietor pays Each partner pays Usually not taxable Corporation is a No tax at the No tax at the entity
all taxes tax on his or her at the entity level taxable entity and entity level level
share of net income taxed at corporate
Income/loss is Income/loss is Income/loss is
and can deduct tax rates
apportioned to passed through to passed through
Taxation losses against certain
members by Dividends to the shareholders to the partners by
agreement with shareholders are agreement with
applicable tax taxable events for applicable tax
guidelines the shareholder guidelines
Pass-through Yes Yes Yes No Yes Yes
None Contributions from Contributions from May sell shares May sell shares Contributions from
Raising capital partners or addition members, addition of stock to raise of stock to raise partners, or addition
through sale of more partners of members, sale of capital, subject to capital, subject to of partners, sale of
of equity interests (subject to federal and state federal and state interest (subject to
restrictions) securities laws securities laws restrictions)
Transferability No No Yes, subject to Yes, subject to Yes, subject to Yes, subject to
of interest restrictions restrictions restrictions restrictions
18 FIDELITY INSTITUTIONAL WEALTH SERVICES
You should only make your choice of entity after You will generally be required to register as an
consulting with your attorney and tax advisor. Only investment advisor with either the SEC or one or
these professional advisors can assist you with the more states if you:
foregoing considerations and advise you on the best
• Provide advice or analysis on securities either
choice of entity and state of formation, as well as any
by making direct or indirect recommendations
additional ﬁling requirements in other states where
to clients or by providing research or opinions
you plan on conducting business.
on securities or securities markets
2.5 Understanding the scope • Receive direct or indirect compensation in any
form for the advice provided
• Engage in a regular business of providing advice
Various factors determine whether you are required
to register your ﬁrm as an investment advisor and,
if so, whether you must make regulatory ﬁlings with Certain advisors, however, may be excluded from this
the U.S. Securities and Exchange Commission (the deﬁnition (e.g., lawyers, accountants, and teachers) or
“SEC”) and/or one or more states. qualify for an exemption from registration.
You must then determine whether you will be Once the determination is made that registration is
required to register your investment advisor required, you must determine whether to register with
representatives in the states where they have clients the SEC or the appropriate state securities regulator(s).
and/or maintain ofﬁces and communicate with clients. The table on the following page highlights some of
the major factors that determine where you should
register. Please keep in mind that these are complex
issues and you should consult a professional who is
knowledgeable about requirements.
REGISTERED INVESTMENT ADVISOR STARTUP GUIDE 19
STATE REGISTRATION SEC REGISTRATION
Manages less than $25,000,000* of assets on a regular Manages, or will manage within 120 days of registration,
and ongoing basis $25,000,000* or more of assets on a regular and
Solely provides services that do not involve regular and Provides investment advice to a registered
ongoing management of assets (e.g., ﬁnancial planning) investment company
Solicits clients on behalf of other investment advisors, Would otherwise be required to register as
but provides no investment advice himself or herself an investment advisor in 30 states or more
Is eligible for an exemption from state registration
by rules or orders of the SEC
Provides investment advice solely through
an interactive Web site
* The advisor has the choice to register with either the SEC or the states(s) where it provides continuous and ongoing investment supervisory
or management services of assets between $25 million and $30 million.
Note: Even if your ﬁrm is required to register with the SEC, your ﬁrm may still be required to ﬁle notiﬁcations with states in which you have
a place of business and/or clients. Each state takes a different position on ﬁling requirements. You should discuss this with a professional
knowledgeable about these legal requirements.
When registration is required, such registration is • A review of stationery and advertising
typically made by: • Submission of each form of your client agreements
• Filing a complete Form ADV, including all relevant • Certain policies and procedures to be implemented
schedules and disclosure reporting pages by the advisor
• Submitting any additional disclosures, information, • Registration of branch ofﬁces
or forms required by all appropriate states
• A bond or a minimum net capital requirement
• Remitting the appropriate ﬁling fees
• An in-person interview of the ﬁrm’s principal(s)
Please note that regulations vary widely from state
• An on-site examination of the books and records of
to state. However, almost all states require that a
regulatory ﬁling be made by both state and federally
covered investment advisors doing business in their Application for registration must be made with
state. Different states may require: either the SEC or the state(s) where you want to offer
• State advisors to register or become licensed
However, certain exemptions may apply depending
• Federally covered advisors to make a notice ﬁling
upon your proposed business activities. Prior to
• Qualiﬁcation and registration of an advisory ﬁrm’s providing advisory services to a client in a particular
principals and representatives state, an advisor should consult an attorney or
• Payment of ﬁling fees compliance professional qualiﬁed to determine
which, if any, regulatory ﬁlings are required.
• Certain additional disclosures to be made to
securities regulators and/or the public
20 FIDELITY INSTITUTIONAL WEALTH SERVICES
2.6 Preparing Form ADV and drafting 2.8 Regulatory ﬁlings
your disclosure statement Among the most important duties that you, as an
An application to register as an investment advisor advisor, have to your clients is to furnish them with
is principally made on Form ADV. Once completed, a clear and accurate disclosure. This disclosure is
Form ADV must include a complete description primarily set forth on Schedule F of Form ADV.
of your investment advisory services, including Schedule F must be transformed from a blank page
your fees, relationships, brokerage arrangements, to a prospectus of sorts, which describes, in sufﬁcient
and both actual and potential conﬂicts of interest. detail, your business activities, including:
Form ADV Part II may also serve as your primary
• The kinds of services available
disclosure statement to clients and prospective clients
and, therefore, is your ﬁrst line of defense against • Who is providing those services
client complaints, litigation, and regulatory actions. • The fees and expenses the client will incur and
It is imperative that you properly translate your whether they are negotiable
business plan into a complete and accurate disclosure
• The compensation to be paid to you by the client
statement that is consistent and fully integrated with
and how the compensation is calculated
your client agreements, the policies and procedures
you implement, and agreements with other industry • Sources of third-party compensation received by
participants (e.g., broker/dealers and referral sources). you that are related to the services provided to
If a wrap fee program will be part of your offering, the client, as well as how that compensation is
you should include Schedule H and a wrap fee determined
brochure in your disclosure statement. • Your afﬁliations with other advisors, broker/dealers,
or other ﬁnancial institutions
2.7 Creating a client agreement • Conﬂicts and potential conﬂicts of interest that
A client agreement is a written document designed might affect your independent judgment
to provide valuable, detailed information about A boilerplate or replicated Form ADV may be
the advisor/client relationship. A well-designed adequate to satisfy the varying registration
client agreement can help deﬁne roles and manage requirements imposed by securities regulators.
expectations. This agreement between the advisor However, no two advisory ﬁrms are identical. What
and the client must be signed by both parties. It helps may be accurate and sufﬁcient disclosure for one
to accurately convey the advisor’s services, fees, and advisor may misstate or omit material information
how those fees will be charged. The client agreement about another.
should outline the use of an arbitration clause.
REGISTERED INVESTMENT ADVISOR STARTUP GUIDE 21
2.9 Electronic ﬁlings 2.11 Representative qualiﬁcations
The SEC and most states have mandated use Regardless of whether you have registered your ﬁrm
of electronic ﬁling via the Investment Adviser with the SEC or state(s), the states retain jurisdiction
Registration Depository (IARD) and the Central to register the representatives of an investment
Registration Depository (CRD) for certain forms. advisor. The qualiﬁcations you must satisfy vary
Both are administered by the Financial Industry among states. However, most states follow the
Regulatory Authority (FINRA). While the IARD and rule known by the North American Securities
CRD accommodate electronic ﬁlings, there are likely Administrators Association (NASAA). The model
a number of paper forms that must also be ﬁled rule provides examination requirements, which can
manually with the states. generally be satisﬁed by passing either the Series 65
or the Series 66 in conjunction with the Series 7.
2.10 State notice ﬁlings In some states, certain professional designations
Federally covered investment advisors must also may qualify for a waiver from the examination
make a notice ﬁling with one or more states where requirement, including:
they have clients. Such notice ﬁlings are usually
• Certiﬁed Financial PlannerTM (CFP®)
required if the advisor meets one or more of the
following: • Chartered Financial Consultant (ChFC)
• Professional Financial Specialist (PFS)
• Has a place of business in the state
• Chartered Financial Analyst (CFA®)
• Provided investment advisory services to more
than ﬁve clients in that state in the past 12-month • Chartered Investment Counselor (CIC)
period, regardless of whether he or she has a place Successfully passing one of the minimum competency
of business in that state exams or holding a qualifying designation does
A notice ﬁling for a federally covered advisor is not equate to a license, or permit an individual to
usually made by ﬁling a complete copy of Form ADV engage in any advisory activities, until he or she has
as ﬁled with the SEC, along with the notice ﬁling fees registered by ﬁling a Form U4 in the required state(s)
required by that state. along with the ﬁling fee and any other documents
requested by the state securities regulator.
22 FIDELITY INSTITUTIONAL WEALTH SERVICES
2.12 Written supervisory procedures • The advisor’s proprietary trading
As an RIA, you have an obligation to adopt and • The accuracy of disclosures made to investors,
implement certain written compliance policies clients, and regulators, including account
and procedures. Rule 206(4)-7 requires advisors to statements and advertisements
consider their ﬁduciary and regulatory obligations • Safeguarding of client assets from inappropriate
under the Investment Advisers Act of 1940 and to use by any advisory personnel
formalize policies and procedures to address them.
• The accurate creation and maintenance
While there are not speciﬁc elements that must be of required records
included in your policies, your procedures should
• Marketing advisory services
be designed to prevent violations from occurring,
detect violations that have occurred, and correct any • The process for valuing client holdings and
violations promptly. assessing fees based on those valuations
• Safeguards for the privacy protection of client
In developing your policies, you should ﬁrst identify
records and information
conﬂicts and other compliance factors that may
create risk exposure for your ﬁrm and your clients, • Business continuity plans
and then design policies and procedures that address In addition to written supervisory procedures,
those risks. The SEC expects that an advisor’s Rule 206(4)-7 requires that advisors name a
policies and procedures, at a minimum, should Chief Compliance Ofﬁcer and conduct an Annual
address the following issues: Compliance Review testing the effectiveness of their
• Portfolio management processes, including compliance program. See www.sec.gov/rules/ﬁnal/
allocation of investment opportunities among ia-2204.htm for a copy of Rule 206(4)-7.
clients and consistency of portfolios with clients’
investment objectives, disclosures by the advisor,
and regulatory restrictions
• Trading practices, including best execution
obligations, the use of client brokerage to
obtain research and other services (soft dollar
arrangements), and allocating aggregated trades
REGISTERED INVESTMENT ADVISOR STARTUP GUIDE 23
2.13 Other elements of the Fidelity bonds. RIAs may obtain a Fidelity* bond
compliance foundation to protect against claims for dishonest acts by the
company’s ofﬁcers or employees.
It is important to ensure that your ﬁrm’s Form ADV,
client agreements, and policies and procedures State surety bonds. Some states require these bonds
are drafted with a full understanding of all your as a condition of registration or as an alternative to
current and proposed business practices. Template meeting minimum ﬁnancial requirements.
agreements and off-the-shelf compliance manuals
ERISA bonds. In order to have the right or power
that have not been drafted to accurately reﬂect your
to make investment decisions for ERISA plans,
speciﬁc business practices create an ineffective
governed by the Employee Retirement Income
foundation for your compliance program and may
Security Act of 1974 (ERISA), you may have to be
lead to regulatory actions or litigation by clients.
In fact, generic or unnecessary policies that do
Directors’ and ofﬁcers’ liability. This insurance
not accurately reﬂect your business practices may
covers claims that arise from a breach of ﬁduciary
actually impose a higher level of responsibility than
duty by an ofﬁcer or director of your ﬁrm.
would otherwise be required by applicable laws,
rules, and regulations. Furthermore, procedures that The decision to purchase a policy is a business decision.
are included in a compliance manual that are not Such insurance is generally not required by securities
consistently adhered to may subject you to regulatory regulators; however, certain clients, particularly
action, and eliminate any defense to claims of institutional clients, may insist on this coverage.
inadequate supervision of your representatives for
2.15 Getting the counsel you need
Federal and state securities laws are very complex,
2.14 Managing risk
making investment advisors a highly regulated
As an RIA you have an obligation to your clients, group. Your initial compliance efforts will form the
yourself, and your business to protect your practice. foundation of your ongoing compliance program
In addition to developing and maintaining a tightly and will have a direct correlation with the future
integrated compliance solution and business success of your business. There are serious long-
operation, there are insurance products available to term costs and consequences of not integrating an
supplement these protections. Of course, there are effective compliance program into your operations.
mainstream insurance offerings to protect property Therefore, careful consideration of the consequences
and casualty exposure. Beyond those, there are of an ineffective compliance foundation and ongoing
policies written with the RIA in mind, such as: program should be made before cutting any corners
in either your legal or compliance counsel.
Errors and omissions insurance. This insurance
protects your ﬁrm, its ofﬁcers, directors, and The required forms, ﬁlings, regulations, and
employees from claims that arise from acts, errors, procedures require careful management.
or omissions in rendering or failing to render
*Not to be associated with Fidelity Investments or
any of its companies.
24 FIDELITY INSTITUTIONAL WEALTH SERVICES
Careful consideration and review by your counsel is
highly recommended. When selecting a compliance
professional and securities attorney, ask questions up
front. The counsel you select should be able to:
• Serve you beyond the initial registration effort
• Understand the relevant initial and ongoing issues
of managing your business
• Maintain the staff and resources necessary to fulﬁll
your ongoing compliance needs
COUNSEL SELECTION CHECKLIST FIRM 1 FIRM 2 FIRM 3
What portion of your business or practice is dedicated to serving the
% % %
regulatory and compliance needs of investment advisors?
What are the qualiﬁcation standards for compliance professionals or attorneys
I will be working with?
What is the goal of the documents furnished (e.g., registration, business
efﬁciency, ongoing compliance, etc.)?
Are all of the documents (e.g., client agreements and policies and procedures)
speciﬁcally drafted to conform with disclosures made in Form ADV, or will I
have to customize them to ﬁt my practice?
What are some of the recent continuing education programs you have
What is the basis for your fees (i.e., ﬁxed, estimated, product, or hourly fee) for
consulting, registration, and building the initial compliance program? What is
included? What are the variables?
Upon completion, is there an established program for personalized and
proactive services for ongoing compliance consulting, or must I contact you
when I detect a required change?
Who maintains responsibility for ensuring that ﬁling deadlines are adhered to?
These sample questions are general in nature and are provided for informational purposes only. You are responsible for evaluating your own
practice and making appropriate decisions for your ﬁrm. Those decisions may be based on these and other factors you deem relevant. These
sample questions are not meant to be exhaustive of all possible questions you may consider. Fidelity Investments is not responsible for your
action or inaction as a result of these sample questions.
REGISTERED INVESTMENT ADVISOR STARTUP GUIDE 25
Stage 3: Preparing your organization
26 FIDELITY INSTITUTIONAL WEALTH SERVICES
Fidelity can help you get your business up and running by providing you with everything
from discounts on ofﬁce furniture, stationery, and business card printing to marketing and
3.1 Opening your business. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
3.2 Setting up your ofﬁce . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
3.3 Addressing human resources needs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
3.4 Developing your brand. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
3.5 Conducting your clearing and custody review. . . . . . . . . . . . . . . . . . . . . . . . 30
3.6 Managing account setup and transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
3.7 Setting up your back ofﬁce . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
3.8 Addressing clients’ ﬁnancial needs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
3.9 Trading . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
REGISTERED INVESTMENT ADVISOR STARTUP GUIDE 27
3.1 Opening your business Ofﬁce suite. Provides ready-made access to resources
such as technology hookups, phones, and conference
The idea of opening your doors as an RIA is exciting.
space. However, the added expenses associated with
However, before you do, you can help ensure your
ofﬁce suites may not be in your budget at startup.
success by having the foundation and infrastructure
in place to support your RIA business. Use the Leased space. Allows you to create your own ofﬁce
following guide to assist you in determining your from scratch and provides a venue for meeting with
readiness for your new venture. clients. And, if you negotiate effectively, it is possible
to grow your ﬁrm without having to move. As with
3.2 Setting up your ofﬁce the ofﬁce suite, at startup you may not have the cash
There are several considerations in selecting the ﬂow to support this added expense.
appropriate ofﬁce space, not the least of which is the
kind of ofﬁce you like. Following are several options, 3.3 Addressing human
with the pros and cons of each: resources needs
Home ofﬁce. Readily available and inexpensive to set As you start your own ﬁrm, there are several
up. However, it may not have adequate space for ofﬁce important steps you need to take to get your
equipment, furniture, and supplies, or provide you organization up and running efﬁciently. You’ll need
room to grow. It may also be difﬁcult to meet with to address payroll, beneﬁts, regulations, and other
clients or create cost-effective technology support for human resources issues. The following checklist
your ﬁrm, particularly as it grows and succeeds. details some of the critical areas you may need to
address to help you set your organization on the path
to growth and success.
Attorney Accountant Resources
Payroll setup and maintenance (federal, state, local
Mandated beneﬁts (unemployment, workers’
compensation, disability) •
Establish employee ﬁles and set up appropriate
retention schedules • •
Comply with federal and state regulations regarding
wage and hour laws • • •
Content for this table was provided by Veritude,® our in-house stafﬁ ng and consulting resource. Veritude is a division of Devonshire Investors,
the private equity arm of Fidelity Investments. Fidelity Institutional Wealth Services has not been involved with the preparation of this content
and does not guarantee or assume any responsibility for its content. There is no assurance that the information is accurate, complete, or timely.
28 FIDELITY INSTITUTIONAL WEALTH SERVICES
3.4 Developing your brand Create stationery. A good-quality paper with
your logo and/or business name can help create a
Before launching your business, you will need to
professional image and establish your ﬁrm’s brand
create your business graphically for marketing
name with current and prospective clients.
purposes. The goal is to create a brand identity that
has a personality all its own. Equally important, your Order business cards. High-quality business cards
brand identity will present a clear, consistent, and with your ﬁrm’s logo and/or business name can help
distinct message to the public. brand your ﬁrm.
To create your brand, follow these easy steps: Create or order marketing materials. You can use
either a graphic designer or Fidelity resources to help
Select a name. Your company name should articulate
you create your marketing materials. Regardless of
your brand and communicate what you do. You may
where you get your materials, it is important that
originate a name for your company (such as AAA
they have a consistent look and feel. This consistency
Investment Planning), or use your personal name
can help create a strong, recognizable image, and
(such as John Doe Investments).
helps distinguish your ﬁrm in the competitive
Create a logo for your business. Your logo is marketplace.
important because it reﬂects a memorable image you
Use the Internet as a marketing tool. The Internet is
want to present to the public about your company.
a valuable marketing tool as well as an educational
A logo can be anything from a series of initials to a
tool that can help you build your business. Whether
personal name, and may include some type of art,
you create a Web site for your business or deliver
graphic, or image. It is advisable to have at least three
bulk e-mails to current and prospective clients, make
logos to choose from and solicit opinions from others
sure you apply the same marketing standards as you
before making your ﬁnal selection. Once the logo
do for your print materials.
process is complete, use the logo in speciﬁc ways to
present a consistent message about your ﬁrm.
REGISTERED INVESTMENT ADVISOR STARTUP GUIDE 29
3.5 Conducting your clearing and custody review
To work as an RIA you must have a clearing ﬁrm to custody the assets you have under management. A careful
review of service providers is recommended to ensure that your custodian can meet your needs, both today and
in the future. The following is a sample checklist of items you may want to consider when reviewing clearing ﬁrms:
TOPICS TO REVIEW WITH PROSPECTIVE SERVICE PROVIDERS FIDELITY FIRM 1 FIRM 2
• Comprehensive view of client relationships regardless of where assets
• Access to portfolio management, client relationship management,
ﬁnancial planning, and portfolio modeling and rebalancing modules
• Single point of contact for service and support
Depth and breadth of investment products and services Yes
• Large selection to meet varied needs of client base
• Special products for afﬂuent clients
Implementation and client service Yes
• One-to-one client service relationship
• Assistance in getting started
Business-building solutions Yes
• Tools to help you grow your business
• Discounts on key business services
• Referral programs
Additional asset protection Yes
• Coverage above and beyond SIPC requirements
Dedicated trading desk Yes
3.6 Managing account setup 3.7 Setting up your back ofﬁce
and transfer In many respects, your back ofﬁce is the backbone of
Regardless of whether you are transferring accounts your day-to-day business operations. It is important
from another ﬁrm or establishing new ones, setting to set it up efﬁciently so that it will continue to
them up correctly on your custodian’s system is crucial. support your operations as your business grows.
You will want to work with a custodian who has a There are a number of tools that you can use to help
dedicated service team with in-depth expertise in the get your ﬁrm off the ground and manage your day-
account setup process, and who will actively work to-day interactions. Consider using the following list
with you to ensure a smooth transfer of assets to your as a guide to help you secure the solutions you may
clients’ accounts. need to conduct your RIA practice more efﬁciently
30 FIDELITY INSTITUTIONAL WEALTH SERVICES
Hardware. Hardware requirements change frequently, 3.8 Addressing clients’
so it is important to make sure that yours can support ﬁnancial needs
the software applications you select, is easy to upgrade,
As a trusted advisor, you want to make sure that
and is compatible with the platform you will be using.
you are equipped to successfully meet the full range
Internet access. In today’s business environment, of your clients’ ﬁnancial needs. You may consider
Internet access is critical to help you stay in touch working with a provider that offers a wide range
with your clients, and stay current on market news of investment products, including alternative
and world events that can affect the ﬁnancial services investments as well as structured products, ﬁ xed
industry and your business. When choosing a service income, and international securities.
provider, select one that can meet your security
When you go independent, you’ll also want to continue
requirements and your bandwidth needs.
serving your afﬂuent clients with the services they’ve
Software. When selecting software, be sure that it grown accustomed to, such as cash management and
will beneﬁt both your clients and your business. Here lending, charitable planning, and trustee services.
are a few ideas you may want to consider:
Database and client management software 3.9 Trading
can help you keep track of your current and As a Registered Investment Advisor, you should pay
prospective clients, manage your interactions with particular attention to the type of brokerage platform
them, track appointments, and set reminders for your custodian offers. For starters, you should be
future callbacks. able to easily access a wide range of investment
Billing software can help save you time, energy, products and trading services — preferably from a
and money by ensuring that invoices are issued single source. You will also want to ensure that the
on time and in an orderly fashion. You can brokerage system gives you broad functionality in
spend more time maintaining existing client the areas of analysis, trading, and reporting. Here are
relationships and attracting new ones. a few things you might want to consider about your
custodian’s brokerage platform:
Financial planning software helps you efﬁciently
conduct analysis for a wide variety of ﬁnancial needs, • Will it easily integrate with a wide variety of
including retirement planning, education planning, portfolio management systems?
insurance assessment, capital needs, and more.
• Does it have a direct-to-market order entry system
Portfolio management software helps you to enable quick execution?
analyze your clients’ holdings, perform “what-if”
• Can you efﬁciently conduct portfolio modeling and
analysis, analyze holdings by classiﬁcation,
rebalancing across multiple accounts?
rebalance allocations, and more.
Portfolio modeling and rebalancing software • Do you get direct downloads to your portfolio
helps you manage client portfolios, reﬁne management system, enabling convenient updates
investment strategies, and monitor client portfolio of account activity?
agreements with those strategies. It should also • What is the trade execution turnaround time?
allow you to combine multiple portfolio models • Does it have custom reporting capabilities to
into one larger strategy, as well as create models enable you to present your clients with the type of
and perform rules-based rebalancing on a highly information they are looking for?
REGISTERED INVESTMENT ADVISOR STARTUP GUIDE 31
Stage 4: Managing and growing
your practice with Fidelity support
32 FIDELITY INSTITUTIONAL WEALTH SERVICES
Fidelity offers you a broad range of products and services — from Fidelity and
external sources — to assist you in selecting those that can help meet your business
and client needs.
4.1 Access a broad range of business-building resources . . . . . . . . . . . . . . . . . 34
4.2 Help take your business further with practice management . . . . . . . . . . . . 34
4.3 Beneﬁt from our experience . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
REGISTERED INVESTMENT ADVISOR STARTUP GUIDE 33
4.1 Access a broad range of business- Commitment to service excellence. This is one of
building resources our key business drivers and the foundation of our
long-term, collaborative relationship with you. We
When you work with Fidelity, you are free to choose
believe the measure of a successful experience is your
the products and services you believe are in the best
total relationship with Fidelity, including the people,
interests of your clients and your ﬁrm. Our success
technology, and tools we provide to our clients. You’ll
is based on helping you become successful, and we
have a dedicated team that will serve as an extension
help make this happen by providing you with access
of your team. You can rely on our technology to help
to a ﬂexible, open technology environment that can
keep your day-to-day operations running smoothly
grow with you.
and efﬁciently. Additionally, you’ll have access to the
Our dedicated relationship managers work with you tools that will help you be more proactive on a daily
to help ensure that you are aware of the wide range basis. Our commitment to service means you can
of products and services available to you — from rest assured that day after day, you will receive the
Fidelity as well as from external sources. Our service best from your Fidelity client service team.
offering is categorized into four key areas:
Extensive products and services. From mutual
Brokerage and custody services. Comprehensive funds to equities, ﬁ xed income, and options trading,
solutions to help you meet the full range of your you have access to one of the largest selections of
investors’ investment needs, enhance your back-ofﬁce investment products in the industry. You can also
efﬁciency, and spend more time strengthening your access a range of sophisticated products that are
client relationships. designed for the high-net-worth client, such as
separate accounts, trustee services, and more.
Technology. With our open technology platform, you
don’t have to ﬁt our mold — we shape ours to yours.
4.2 Help take your business further
Fidelity WealthCentral® is a Web-based brokerage
with practice management
platform that is easy to use, can help scale your
technology investment, and increase your efﬁciency. Building and managing your business can be a full-
WealthCentral® combines our robust trading, time job. In today’s competitive environment, you
account administration, and rebalancing capabilities can rely on the resources of the Fidelity Practice
with optional third-party market-leading client Management Program.SM It offers you what you need
relationship management, ﬁnancial planning, and to help you accelerate growth, streamline operations,
portfolio management modules. The platform can and manage risk. The program is designed to help
accommodate your needs as you grow your business. clients save on business expenses year-over-year.
34 FIDELITY INSTITUTIONAL WEALTH SERVICES
Through a comprehensive suite of services, products, Intellectual capital. You will have access to
and more than 50 alliance vendors, you and your intellectual capital from across the Fidelity
clients can beneﬁt from: Investments organization to help inform your
decisions. Tap into the market commentary and
• Turnkey solutions and customized, consultative
analysis from our Market Analysis, Research
& Education (MARE) group, a unit of Fidelity
• Unprecedented access to tools, services, and Management & Research Company, which provides
industry expertise timely investment-oriented content on developments
• The economies of Fidelity Investments’ scale and in the ﬁnancial markets. Join our weekly market
buying power, including deep discounts on third- update calls (Fidelity Wake-Up Calls) from our
party products and services Fidelity Capital Markets* desk. Take advantage of
the industry insights from the Fidelity Millionaire
4.3 Beneﬁt from our experience OutlookSM Series, which provides insight into
millionaire investors’ attitudes and behaviors on
Fidelity has more than a decade of experience a variety of investing topics, including ﬁnancial
helping RIAs succeed. By leveraging our extensive concerns, use of ﬁnancial advisors, and the economic
knowledge of the RIA business, and effectively outlook. Or you can leverage an array of case studies,
utilizing the broad range of products and services we white papers, client satisfaction studies, and practice
make available to you, we are conﬁdent we can help management insights on a variety of timely and
you build a successful business. Here are some of the important topics.
services available to you as a Fidelity client:
Special events. Fidelity clients are invited to
Transition resources. Through the Fidelity Transition participate in several educational, networking, and
Solutions program, an experienced and knowledgeable sponsorship events. These special events, some of
team can help you navigate your way through the which are available for clients to attend online or
four critical areas to becoming an RIA: business in person, cover a wide range of topics, including
consultation services, marketing and business market perspectives, industry insights, regulatory
development, technology and back-ofﬁce support, and compliance updates, and best practices.
and investor solutions. All of which are supported
by Fidelity’s products, services, and long-standing
commitment to supporting ﬁnancial professionals.
*Services provided by Fidelity Capital Markets, which is a division of National Financial Services LLC (NFS).
NFS is a Fidelity Investments company.
REGISTERED INVESTMENT ADVISOR STARTUP GUIDE 35
The following chart provides a summary of the tasks commonly associated with each of the four stages of going
independent. A Fidelity sales representative can help guide you through all of them.
STAGE 1: STAGE 2:
MAKING THE COMMITMENT DEFINING YOUR BUSINESS ENTITY
Understanding your potential ﬁnancial, legal, Serving as an RIA requires you to adhere to
and professional obligations can help you particular professional ethics and regulation
decide if becoming an RIA is the right next step requirements.
in your career.
• Determine your business model • Choose the form of your organization
• Check your ﬁnancials • Manage registrations and ﬁlings
• Create a business plan • Understand compliance issues
• Explore transition issues • Consult with legal counsel
• Secure liability insurance
Accomplishing these tasks can be made easier with Fidelity’s resources. We provide a wide array of products
and services designed to help you meet your goals and speciﬁc startup needs, all within your time frame.
Through our resources and tools, technology and investment products, and our Fidelity Practice Management
Program, we offer:
ONLINE TOOLS AND COMPLIANCE LIABILITY OFFICE AND FIRM MARKETING
GUIDES AND LEGAL INSURANCE MANAGEMENT SUPPORT
• Compare revenue • Help manage • Obtain appropriate • Ofﬁce space rental • Turnkey and custom
and expenses registrations and errors & omissions and setup services
of a wirehouse ﬁlings insurance and other • Supplies • Brand development
representative • Develop and liability coverage
versus an • IT consulting, • Marketing plans
prepare Form ADV hardware, software,
independent RIA • Web site
with the Economic • Oversee compliance and support development
Estimator • Collateral, business
• Create a • Help navigate • Postage and card, and stationery
personalized employee shipping design and
roadmap and agreements, and development
to-do list with the
Roadmap Planning • Access a counsel
Tool selection checklist
• Access an activity (within this guide)
worksheet, a setup
a proﬁt and loss
worksheet all within
36 FIDELITY INSTITUTIONAL WEALTH SERVICES
STAGE 3: STAGE 4:
PREPARING YOUR ORGANIZATION MANAGING AND GROWING YOUR PRACTICE
Before you open your doors, ensure you have Once your business is up and running, a
the business foundation and infrastructure in dedicated Fidelity relationship manager — your
place to support your practice. key strategic business consultant — can help you
drive scale, potentially grow your business, serve
your clients, and help keep you at the forefront
of your industry.
• Set up your ofﬁce • Use professional or business development
services to deﬁne strategies for reaching
• Develop your brand and marketing materials prospects and enhancing client relationships
• Establish the appropriate technology • Ensure products and services are aligned with
infrastructure clients’ needs
• Ensure you have access to a wide range of • Access proprietary research to help measure
investment products and services and improve client satisfaction and understand
INVESTMENT BUSINESS PRACTICE
TECHNOLOGY HR BENEFITS CLIENT INSIGHT
PRODUCTS DEVELOPMENT EQUITY
• Access Fidelity • Alternative • Affordable • Strategies to • Client • Continuity
WealthCentral,® investments health care help you reach satisfaction planning
a Web-based • Managed services, prospects and measurement • Succession
brokerage products including enhance client tools and best planning
platform that dental and relationships practices
• Life insurance • Assistance
combines supplemental • Sales talent • Market trend
• Trustee services selling your
our robust coverage development information practice in the
trading, account • Charitable • Professional and research
• Lead generation future
administration, solutions development on millionaire
and rebalancing programs clients
REGISTERED INVESTMENT ADVISOR STARTUP GUIDE 37
38 FIDELITY INSTITUTIONAL WEALTH SERVICES
REGISTERED INVESTMENT ADVISOR STARTUP GUIDE 39
40 FIDELITY INSTITUTIONAL WEALTH SERVICES
For more information about how we can provide you with
the ongoing support and expertise you may need to help
you start your business, contact a dedicated Fidelity
Representative at 1-800-735-3756.
Option A Option B
Corner Die Cut Center Scallop Die Cut
RegIsTeRed InvesTmenT AdvIsoR sTARTup guIde 41
fidelit y ins titutional we alth services
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For Investment Professional use only. Not for distribution to the public as sales material in any form.
The third-party service providers listed are independent companies and are not affiliated with Fidelity Investments. Listing them does not suggest
a recommendation or endorsement by Fidelity Investments.
The registered marks appearing herein are the property of their respective owners.
The content provided in this brochure is general in nature and is for informational purposes only. This information is not individualized and is not
intended to serve as the primary or sole basis for your decisions as there may be other factors you should consider.
The content should not be construed as legal or tax advice. Fidelity Investments does not provide legal or tax advice. Consult an attorney or tax
professional regarding your specific legal or tax situation.
Clearing, custody, or other brokerage services may be provided by National Financial Services LLC or Fidelity Brokerage Services LLC,
Members NYSE, SIPC.