What Is a Small RIA? How Regulators Define It, and What Running One Takes

The short answer: A small RIA is a registered investment adviser at the small end of the industry, but there is no single legal definition. The SEC treats an adviser as a small entity if it manages under $25 million and holds under $5 million in total assets. Most advisers under $100 million register with their state rather than the SEC. And in plain terms, the typical small adviser is very small: the average state-registered firm has one non-clerical employee, nine clients and $19 million under management, according to the Investment Adviser Association and Comply's 2026 snapshot.

Which definition matters depends on the question you are asking. The regulator you answer to turns on assets. The work you do yourself turns on headcount.

Three ways "small" gets defined

The SEC's own definition is narrow. Its January 2026 proposing release found only 451 of 15,909 SEC-registered advisers, about 3%, qualified as small entities. The same release proposed raising the threshold from $25 million to $1 billion, which by the SEC's estimate would cover about 75% of advisers. The comment period has closed, and as of September 2026 the change remains a proposal.

How many small RIAs there are

Almost every adviser is small by some measure. The IAA and Comply 2026 snapshot, covering 2025:

• State-registered advisers: 15,799, plus 4,764 state exempt reporting advisers. The average one has 1 non-clerical employee, 9 clients and $19 million in assets under management, and two-thirds offer financial planning.
• SEC-registered advisers: a record 16,544. Of those, 6,148 have one to five non-clerical employees and 3,594 have six to ten. 92.8% have 100 or fewer non-clerical employees, and 67.4% manage less than $1 billion.
• The median SEC-registered adviser: 8 employees and $446.9 million under management.
• Where they work: over half of SEC-registered advisers operate from a single office, and 18.5% of adviser offices are in private residences.
• Growth: about 500 advisers a year, net, move from state to SEC registration as they cross the asset line.

Where a small RIA registers

Assets under management decide the regulator:

A few exemptions let smaller firms register with the SEC anyway: advisers that would otherwise have to register in 15 or more states, internet advisers that give all advice through an interactive website, and newly formed advisers expecting to qualify within 120 days. In the other direction, federal law bars a state from requiring registration of an adviser with no place of business there and fewer than six clients resident in that state over the past 12 months.

What it takes to start one

The requirements are the same whether the firm has one person or ten:

1. The individual qualification. Investment adviser representatives are licensed in every state. The usual route is the Series 65, or the Series 66 taken with the Series 7. Certain designations, including the CFP, waive the exam. Advisors coming from a broker-dealer should read what happens to the Series 7 when you go RIA.
2. Form ADV. Part 1 and a Part 2A narrative brochure, filed electronically through IARD, and amended every year within 90 days of the fiscal year end.
3. A compliance program. SEC-registered advisers must adopt written policies, designate a chief compliance officer and review the program at least annually under Rule 206(4)-7. State-registered advisers follow their state's rules.
4. Custody and records. Client assets sit with a qualified custodian that sends statements at least quarterly, and books and records are kept for at least five years, the first two in the adviser's office.

What that costs, and whether a book of a given size can carry it, is its own question. Can you go independent with a small book walks through the minimums and a first year's costs.

What solo practice actually looks like

The data on one-person firms is consistent: they are common, and they earn less than practices with support.

• Kitces Research's 2025 productivity study found 23% of advisory firms operate as unsupported solo practices, and 78% of those are trying to grow. The median unsupported solo advisor brings in $182,500 in revenue, 64% less than the $500,000-plus median for solo advisors with support staff.
• Its earlier study found solo firms had a median of 40 clients per advisor, and advisors on three-person teams had about four times the revenue of solo firms.
• Cerulli reported in December 2025 that 51% of advisors work in teams, and that team-based practices grow organically at more than twice the rate of solo practices, $20.3 million a year against $8 million.

The pattern points to one decision more than any other: when to add the first support hire. A solo owner is also the firm's compliance officer, operations desk and planner, and the time for clients comes out of what is left. Solo owners should also plan early for who takes over the clients, which succession without a successor covers.

Other ways to run a small practice

Starting your own RIA is one of several routes for a small practice:

• Join an existing RIA as an investment adviser representative. The firm carries registration, compliance and operations. See what an independent RIA is.
• Hybrid. Keep a broker-dealer registration for commission business alongside advisory work. See the hybrid RIA, explained.
• An independent broker-dealer. Commission and advisory business under a broker-dealer's supervision, as a 1099 contractor. See what an independent broker-dealer is.
• Supported independence. A platform supplies compliance, technology and some back-office staff while the advisor owns the practice. RIA platforms, explained compares the types.

Advisors weighing these routes for a small book, confidentially and with the economics of each laid side by side, are welcome to request an introduction.