How many clients can I have before I must register as an adviser in my state?
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It depends on the state. Some let a small adviser skip registration with only a few clients there. In New York, Georgia and Florida it's fewer than six, and New York counts your fund as one client. Illinois, New Jersey and Pennsylvania allow up to five. North Carolina, Louisiana and Kansas allow fewer than 15, if you don't hold yourself out as an adviser. So the same fund can be exempt in one state and need registration in the next.
Everything here is for educational purposes only and is not legal, tax or investment advice, or an offer to buy or sell any security. Laws and thresholds change and depend on your facts, so talk to a qualified attorney before acting.
Key facts
- New York, Georgia and Florida: fewer than six clients; New York counts the fund as one.
- Illinois, New Jersey and Pennsylvania: up to five clients.
- North Carolina, Louisiana and Kansas: fewer than 15, without holding out to the public.
- Many state exemptions apply only to advisers without an office in that state.
- The same fund can be exempt in one state and need registration in the next.
Transcript
Operator: In New York, your fund counts as one of your clients. And you only get five.
Founder: Wait. My fund is a client?
Operator: Some states let a small adviser skip registration if it has only a few clients there.
Operator: In New York, Georgia and Florida, that's fewer than six. And the fund takes one slot.
Operator: Illinois, New Jersey and Pennsylvania: also five. But no rule says the fund counts as one.
Operator: North Carolina, Louisiana and Kansas: fewer than 15.
Founder: So the same fund...
Operator: ...can be exempt in one state and need registration in the next.
Founder: So in New York, my fund...