The financial district in Dallas is booming. Whether you’re a seasoned portfolio manager or a newcomer on the scene, it’s hard to resist the call of Y’all Street.
Texas is firmly established as a premier destination for financial services in the U.S. There are tens of thousands of Registered Investment Advisers working across the states, reporting no less than $128 trillion in assets managed between them.
And since Texas consistently ranks among the best homes for state-registered firms, Dallas is turning into a magnet for new ventures. Starting your own firm means you can build a legacy, so here’s what you should know.
1. Understand the advisory landscape
The financial world revolves around trust, but this can only be built on the right foundations. In the advisory space, you need to act in your clients’ best interests.
Most professionals choose a Limited Liability Company (LLC) because it helps to keep personal assets separate from business liabilities. It’s an important distinction in this industry, since market volatility can throw more complexities into the mix.
2. Setting up an LLC in Texas
Once you proceed, your next step is official registration with the state. This is where you learn how to start an LLC in Texas, starting by filing a Certificate of Formation with the Secretary of State. Then you will need to:
- Choose a unique name that includes Limited Liability Company, either in full or abbreviated to LLC.
- Pay the state a mandatory $300 filing fee for this document.
- Appoint a registered agent with a physical Texas address to help handle legal correspondence.
- Create an operating agreement if you’d like more clarity on how your firm will be managed, including profit distribution.
3. Licensing and regulatory basics
Registering as a financial adviser is handled either:
- At the federal level by the SEC, or
- At state level by the Texas Securities Board.
Generally, if you manage less than $100 million in assets, you will only need to register with the state. This process involves filing Form ADV through the Investment Adviser Registration Depository (IARD) system.
You should expect to pay a $75 firm registration fee, plus $35 for each representative. You may also need to prove solvency, usually via a certified balance sheet that is no more than 90 days old.
4. Operations, banking and insurance
With your legal and regulatory filings underway, you need to build a functional home for your new business.
Opening a dedicated business bank account is a non-negotiable step in maintaining the corporate veil of your LLC. We never recommend mixing personal and professional funds, as this can jeopardize your liability protection.
You might also choose to explore professional liability insurance, sometimes called Errors and Omissions (E&O) insurance in this industry. This keeps you covered if a client claims your advice led to a financial loss.
5. Launching with compliance in mind
Your first day of trading is just the start of a long compliance journey. You’ll need to maintain a written compliance manual and designate a Chief Compliance Officer to help oversee the activities within your firm.
Building good habits early helps to show your clients that you take their security seriously. And by staying organized and following state rules, you can just focus on what you do best: helping your clients achieve their financial dreams.
Peyman Khosravani is a global blockchain and digital transformation expert with a passion for marketing, futuristic ideas, analytics insights, startup businesses, and effective communications. He has extensive experience in blockchain and DeFi projects and is committed to using technology to bring justice and fairness to society and promote freedom. Peyman has worked with international organizations to improve digital transformation strategies and data-gathering strategies that help identify customer touchpoints and sources of data that tell the story of what is happening. With his expertise in blockchain, digital transformation, marketing, analytics insights, startup businesses, and effective communications, Peyman is dedicated to helping businesses succeed in the digital age. He believes that technology can be used as a tool for positive change in the world.
