If you are a state registered RIA, the primary state where you file will be your home state where your office is located and where you conduct your advisory practice. As your business grows and you add clients in other states, the general rule is that you’re allowed to have up to five clients in each of the other states without having to make any filings or pay any fees (unless you have a place of business in that state – in which case you need to register in that state).
However, before you take on your sixth client in any state, you will need to register and be approved by the state. Four states do not recognize the five-client allowance. They are Nebraska, New Hampshire, Louisiana, and Texas. The process varies across these states, but all four require some level of registration and payment of fees right from the first client.
For SEC registered RIAs, even though the firm is registered with the SEC and the states have no supervision authority over the firm, you must “notice file” in your home state and any state in which you have a place of business or more than five clients. Notice filing is a fairly simple process of electronically sending the state a copy of your Form ADV Part 1, and paying the notice filing fee.
Note that although the SEC registers certain RIA firms, the SEC does not register the Investment Advisor Representatives (IARs) of the firms. The states can and do require registration of the IARs (with certain exceptions like New York) having a place of business within the state.