Registered Investment Advisors have surged as an asset class. Over the years they have grown tremendously in size as their legal obligation to act as a fiduciary greatly appeals to those trying to preserve wealth. Nonetheless, amid all this growth the regulatory microscope on Registered Investment Advisers (RIAs) has never shined brighter. From the SEC’s new marketing rules to heightened cybersecurity expectations, RIAs sit at the intersection of compliance and client trust. For general partners (GPs) raising capital and limited partners (LPs) allocating to funds, an RIA’s regulatory posture isn’t just a box to check, it’s a differentiator in credibility, distribution, and fundraising success.
At Dakota, we see regulatory readiness as an asset should be treated the same way as investment readiness: systematic, measurable, and transparent. Below, we outline 10 practical tips RIAs can use to stay ahead of regulators while bolstering their value to clients and partners.
1. Keep Form ADV Current and Precise
Small errors on Form ADV are red flags. Ensure updates reflect fee structures, strategies, conflicts of interest, and affiliated business relationships. Transparency here builds trust and minimizes SEC exam friction. Go beyond compliance by making the ADV a clear reflection of your firm’s value proposition, LPs often view it as a first test of your integrity.
2. Master the SEC Marketing Rule
Testimonials, endorsements, performance metrics, and third-party ratings are fair game, but must be substantiated and disclosed correctly. Train your team and audit materials quarterly. Establish a “pre-clear” workflow for marketing and client communications so you never scramble to fix compliance gaps retroactively.
3. Bolster Cybersecurity Controls
RIAs handle sensitive client and fund data. Build a cyber program with incident response plans, vendor testing, and ongoing training. The SEC is signaling this as a high-priority exam focus. Demonstrating resilience against ransomware or phishing attacks not only satisfies regulators but also reassures allocators who increasingly evaluate operational risk.
4. Maintain Exam-Ready Books & Records
Digitize and centralize. From emails to compliance manuals, a clean and accessible record system accelerates audits and demonstrates operational discipline. Think of records management as storytelling, when regulators or LPs review your materials, the goal is to show an organized, disciplined culture rather than a reactive one.
5. Test Policies & Procedures Annually
Written policies are not enough, document your annual compliance review, test controls, and show evidence of remediation. The SEC looks for continuous improvement, not boilerplate binders. Consider engaging third-party compliance consultants to run “mock exams” and identify blind spots before regulators do.
6. Align ESG Disclosures with Reality
If ESG is in your marketing, it must also be in your process. Inconsistencies between ESG claims and actual investment practices have led to recent enforcement actions. Build traceability between what’s promised in pitch decks and what shows up in portfolio company monitoring and allocators will increasingly ask for proof.
7. Validate Valuation Practices
For illiquid investments, adopt independent checks and clearly document methodologies. LPs increasingly demand valuation transparency before committing capital. Establish valuation committees or rotate independent auditors to show rigor and fairness in how numbers are calculated.
8. Clarify Fees and Expenses
From fund administration to broken-deal costs, clearly delineate who pays what. The SEC and LPs alike scrutinize fee transparency as a measure of integrity. Consistency between offering documents, invoices, and actual expense allocations reduces friction in both fundraising and exams.
9. Oversee Third-Party Vendors
RIAs rely on custodians, administrators, and technology partners. Conduct due diligence, document oversight, and ensure contractual protections, outsourcing does not eliminate responsibility. Regulators increasingly view vendor management as part of your fiduciary duty, so maintain vendor risk registers and escalation protocols.
10. Monitor the Regulatory Horizon
From proposed custody rule rewrites to potential AI oversight, staying ahead matters. Build a “regulatory radar” process so your firm isn’t caught off guard. Assign responsibility internally for scanning SEC speeches, enforcement trends, and industry alerts, then brief your leadership and investor relations teams quarterly.
