How much does it cost to start an RIA? A practical budgeting guide

What an RIA is and why registration matters

Definition and core services

A Registered Investment Adviser provides individualized investment advice and manages client portfolios for a fee. In plain terms, an RIA is a business that gives ongoing recommendations or portfolio management and usually has a fiduciary duty to clients. If you are exploring how to start an RIA, you should begin by mapping the services you plan to offer, because the scope of services affects both regulatory filings and operating costs.

Regulatory purpose and investor protections

Registration links an adviser to a regulator and a public record, typically using the Form ADV. That registration establishes which rules apply and what kind of oversight the firm can expect, which in turn shapes your compliance workload and budget. For specifics on Form ADV and registration basics, consult official guidance from the SEC SEC Form ADV guidance

How SEC versus state registration affects startup costs

AUM thresholds and who registers with the SEC

Whether you register with the SEC or at the state level is a primary cost determinant. SEC registration usually applies once you meet federal AUM thresholds and brings a different set of filing and oversight obligations than state registration, so that decision affects both initial and ongoing costs. The SEC guidance on adviser registration explains the general thresholds and filing structure you should review as you plan SEC Form ADV guidance

State notice filings and state exam regimes

State-registered advisers face notice filings and state-level exams that vary by jurisdiction. Some states charge modest notice fees, while others add higher initial or renewal charges; that variation is an important part of budgeting for the first year. For state filing procedures and guidance, consult the North American securities regulators’ resources NASAA adviser guidance. For California-specific instructions see the DFPI guidance DFPI SEC investment adviser

One-time filing and registration fees to budget for

IARD and FINRA fee schedule

New RIAs commonly use the IARD system to submit Form ADV and pay associated filing charges. The IARD and related industry fee schedules create predictable administrative costs, though the exact totals depend on your filing choices and state notices. Check the official IARD fee information when listing expected administrative charges IARD fee schedule. The SEC also maintains an IARD filing page with procedural details SEC IARD filing

State notice filing examples

Beyond IARD, plan for initial state notice filings and any state-specific initial fees. Those costs can add several hundred to several thousand dollars in year one, depending on jurisdiction and whether you need local filings for multiple states. Use state regulator sites to confirm current fee amounts before finalizing your budget NASAA adviser guidance

How to complete Form ADV and IARD filings

Which parts of Form ADV matter for costs

Form ADV has multiple parts that affect disclosure and the time you spend preparing materials. The effort to complete specific sections, such as business practices and disciplinary history, determines whether you can do the work yourself or pay for professional help. Expect time for careful answers and document collection, which can translate into billable hours if you hire a consultant or attorney. See Form ADV instructions for details Form ADV instructions (PDF)

Timing, filing mechanics and common documentation

Filing through the IARD requires account setup, form preparation, and related uploads. Some advisers prepare ADV drafts themselves and then pay a compliance consultant for review or submission. That hybrid approach can limit fees while ensuring important items are complete; assess the hours you and any helpers will need and add those costs into the initial budget, and consult the industry filing schedule if you need fee details IARD fee schedule

Compliance program, CCO duties and ongoing compliance costs

What a basic compliance program includes

Outsourcing CCO versus hiring in-house

Many small firms start with outsourced Chief Compliance Officer services to manage policies, testing, and annual reviews. Outsourcing can reduce full-time payroll but adds recurring vendor fees; hiring in-house staff raises payroll and benefits costs but gives internal control. Consider both options and get quotes to see which matches your budget and scale.

Whether outsourced or in-house, compliance tends to be a material ongoing cost compared with a bare-bones DIY path. Industry analyses show that adding recurring compliance support typically increases operating budgets noticeably, so factor those fees into multi-year planning Kitces analysis

Insurance: E&O, D&O and budgeting for premiums

Types of insurance advisers commonly buy

Advisers commonly purchase errors and omissions insurance and directors and officers coverage to protect the firm and its principals against claims. These policies are standard for many RIAs and are considered part of prudent risk management. The specific lines and limits you choose will shape the premium and coverage you obtain.

Factors that drive premium costs

Insurance premiums vary by firm size, services offered, limits, and claims history. For small firms, professional liability premiums are often a multi-thousand-dollar annual item, though exact figures depend on coverage choices and underwriting. Because premiums vary materially, get quotes from insurers before locking budget numbers Marsh insurance guidance

Custody, technology and operations: platform fees and integrations

Custodian and custody-fee considerations

Custodian platforms, custody fees, and custodial reporting options create both setup and ongoing costs. Custodians may charge fixed or AUM-based fees, and additional services like direct trading access or aggregated reporting can change monthly bills. Because these fees scale with AUM and service levels, ask custodians for current pricing and integration details when building your budget Schwab RIA Benchmarking Report

CRM, portfolio accounting and trading tech costs

Advisory technology-CRM, portfolio accounting, reporting and trading infrastructure-has both one-time integration costs and recurring subscription fees. The total depends on features you need. Get vendor quotes and include estimated integration hours when you plan your first-year cash needs, since the combination of setup work and platform fees often surprises new founders Schwab RIA Benchmarking Report

Typical startup scenarios and realistic budget ranges

Low-cost DIY launch

One common scenario is a low-cost DIY launch where a founder files forms directly, uses basic tech, and keeps compliance work in-house. Industry discussions suggest that this path can cost a few thousand dollars in initial outlays if you limit paid services. The DIY path reduces early cash needs but raises the burden on your time and documentation quality.

Moderate launch with outsourced services

A moderate launch often pairs outsourced compliance or part-time consultants with modest tech subscriptions and targeted marketing. Practitioner breakdowns from recent analyses indicate that these launches commonly reach the high five- to low six-thousands in initial costs when you include basic outsourcing and vendor fees, though your numbers will vary with choices Kitces analysis

Full-featured launch with staff and marketing

Full-featured launches, where firms hire staff, invest in marketing and buy comprehensive tech stacks, often scale into the tens of thousands or low six figures. Staffing, advertising campaigns and enterprise-level vendor contracts are the main drivers that move a plan from moderate to high cost, so map these choices to your growth plan and cash runway Schwab RIA Benchmarking Report

Hiring, payroll and scalable staffing cost considerations

When to hire versus outsource

Deciding whether to hire or outsource depends on your projected workload, desired control, and cash runway. Outsourcing can delay payroll expenses and provide expertise early, while hiring increases fixed costs and requires payroll infrastructure and benefits administration. Compare vendor fees against estimated salary and benefit totals before choosing.

Payroll, benefits and contractor trade-offs

If you hire, budget for wages, payroll taxes and benefits, which raise recurring monthly burn. Contractors can reduce benefits obligations but may cost more hourly and offer less continuity. Use conservative estimates when modeling hiring to avoid underestimating early cash needs, and plan for the administrative work of payroll and HR even if you start small Schwab RIA Benchmarking Report

Common mistakes and where new RIAs overspend

Misjudging recurring compliance and insurance costs

New firms often under-budget recurring compliance and insurance fees. Compliance programs and annual insurance premiums are ongoing obligations that can surprise founders who focus only on one-time setup costs. Early quotes from vendors and insurers reduce this risk and help you avoid cash shortfalls.

Underestimating integration and vendor fees

Another common error is underestimating vendor setup and integration work. Tech integrations can require additional developer or consultant hours, and some vendors charge onboarding fees. Get written estimates for integration hours and vendor setup charges before you commit to platforms, and add a contingency buffer in year one IARD fee schedule

Decision checklist: choosing registration path, vendors and insurance

Key decision factors

Key decision factors include projected AUM, services offered, expected client base, regulatory complexity and fee schedules. Use those factors to narrow custodian and tech vendor options, and to decide whether to register with the SEC or states. Confirm regulator guidance and vendor terms before making firm commitments and check our investing resources SEC Form ADV guidance

Checklist to compare options

Before you sign contracts or submit forms, get written quotes for filing fees, insurance, custody and vendor subscriptions. Compare recurring versus one-time costs and estimate how each line scales with AUM. A short checklist with these items can keep comparisons consistent and reduce decision risk. Learn more about us about

Sample 3-year startup budget template and scenarios

What to include in year-one versus later years

Year one typically contains many front-loaded expenses: registration and filing fees, compliance setup, initial insurance premiums, vendor onboarding and initial marketing. Years two and three more often show recurring insurance, vendor subscriptions and payroll scaling with AUM. Identify which items are one-time and which recur, and track how each grows with assets under management.

Scenario worksheets to adapt to your firm

Create scenario worksheets that let you replace placeholders with primary-source quotes. For each scenario, list filings, compliance, insurance, custody and tech, marketing, payroll and contingency. Use conservative assumptions for recurring costs and update the worksheet when you receive vendor quotes to keep the plan realistic Kitces analysis

Practical next steps and a realistic timeline for launching an RIA

Prioritized action list for the first 6-12 months

Start by choosing your registration path and preparing a draft Form ADV. Next, request custodian, vendor and insurer quotes and draft your basic compliance program. Then finalize filing submissions and begin vendor onboarding, allowing time for notice filings and vendor lead times. Stagger tasks so you have quotes before signing commitments.

When to get quotes and hire help

Get custody and insurer quotes early; these items materially affect your budget and can take time to deliver. If you are unsure about ADV disclosures or compliance design, engage a compliance consultant or attorney before filings. Use official filing schedules while you wait for vendor quotes to create a working budget IARD fee schedule. If you need assistance, contact us

Conclusion: build a budget, verify quotes and expect variability

Key takeaways

The regulator you choose is a major determinant of filing scope and oversight, and therefore of your budget. Many other costs, including insurance and vendor fees, vary widely and should be verified with primary sources before you commit. Expect recurring compliance and insurance to be meaningful line items in ongoing operations.

Where to verify final numbers

Verify filing details with the SEC and IARD, get vendor and custodian quotes, and obtain insurer proposals to form a final budget. Use a conservative contingency and review recurring costs periodically as your firm grows to avoid surprises SEC Form ADV guidance

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.