There are only about 1,200 registered investment advisory firms that have filed with both the Securities and Exchange Commission and regulators in other countries, a recent study found.
Just 381 RIAs based in the U.S. — 2.6% of the entire ranks — have registered in other countries, and 797 advisory firms from other countries have current Form ADV filings with the SEC, according to a report by financial advisor matchmaking and lead generation service SmartAsset. As U.S. tariffs under President Donald Trump’s administration continue to raise questions about many types of international business, the report provides a lens into the sparse ranks of firms that have registered with regulators in multiple countries.
The findings stem from the question on Form ADV asking RIAs if they are registered with a foreign regulator. While the data on RIAs based in the U.S. “didn’t go that far into how they’re operating and in which countries,” it highlighted how firms from highly populated East Coast states like New York, Massachusetts and Connecticut are more likely to have a foreign registration — and the fact that it is rare among advisory companies from many states, said Jaclyn DeJohn, a certified financial planner who is SmartAsset’s director of economic analysis. The foreign firms with RIA units that have registered with the SEC include multinational conglomerates with big U.S. wealth management businesses, such as UBS and RBC.
But others may be seeking new opportunities in the U.S. among expatriates or American citizens, according to DeJohn. “Maybe these firms have identified niches in their areas,” she said. “That’s a good way to really kind of open up your potential addressable market.”
READ MORE: Record-breaking RIA growth, in 5 charts
In all, RIAs with headquarters in 55 other countries have registered with the SEC. The United Kingdom has the most (248), with Canada (138), Hong Kong (66), Switzerland (54) and Singapore (39) rounding out the top five. The RIAs that have registered with foreign agencies reflect the low percentage of advisory firms that have taken that step: 10 states have only one such firm and another 18 have zero.
“While local households often serve as an RIA’s main prospect base, some firms opt to open their total addressable market by providing investment and advisory services overseas,” the SmartAsset report said. “At the same time, some foreign-based firms have registered with the [SEC] in order to provide business services in the U.S. In both cases, focusing U.S.-based resources on foreign services — or vice versa — may impact the competitive landscape for firms in each state or signify potential niche service opportunities.”
The small group of U.S. RIAs with foreign registrations may also reflect the simple difficulty of filing with another regulator in a business that already poses enough compliance burdens at home.
When it makes sense for an RIA to register with foreign regulators
Bozeman, Montana-based RIA firm Bitterroot Capital Advisors registered with Canadian regulators in Ontario and British Columbia roughly 20 years ago because its customer base of ultrahigh net worth families with $2.6 billion in wealth includes residents in those provinces, said Andrew Martzloff, a partner and the founder of the firm. Canadian registration poses some high barriers to entry related to the cost, examination requirements and shifting regulations.
“You have to have Canadian counsel, and everything goes through the lawyers,” Martzloff said. “That’s just the custom in Canada. You have to have a substantial amount of business there to make it worthwhile as a U.S.-based advisor.”
READ MORE: Here’s a financial advisor’s estimated value to clients
The domination of banks in Canada’s wealth and advice market means that “there are very few firms that we know of in Canada that do what we do” in offering access to public and private investments in any country, he said. On the other hand, it has taken about two decades “to gain all this expertise and to bear the cost of the regulatory hurdles” of the firm’s geographical footprint, he added. RIAs considering a push north of the border should consult a Canadian securities lawyer and evaluate its potential business there.
“If you’re not differentiated, you don’t have the margins,” Martzloff said. “If you don’t have the margins, you can’t pay the compliance costs. That’s kind of the business conundrum.”
-1024x683.jpg "Florida Roads Become a Battleground for Illegal Immigration")
