RIAs are fully registered with the SEC and face the full set of compliance obligations: custody rules, written policies, code of ethics, brochure delivery, and periodic examinations. ERAs are exempt from full registration but still file Form ADV. ERAs complete a subset of Part 1A and Schedule D, but skip the brochure (Part 2) and Form CRS (Part 3).
The practical difference matters most for cost and overhead. RIAs must designate a Chief Compliance Officer, adopt written compliance policies, and prepare for SEC examinations. ERAs avoid these requirements, which significantly reduces the compliance burden for smaller or newer fund managers. However, ERAs are still subject to the antifraud provisions of the Advisers Act and must keep their filings current.
If you rely on the private fund adviser exemption and your AUM crosses $150 million, you must transition from ERA to full RIA registration within 90 days of your annual amendment. Plan ahead, because the compliance buildout (policies, brochure, code of ethics) takes time.
See ERA vs. RIA: Understanding the Difference.
This content is for informational purposes only and does not constitute legal, tax, or compliance advice. Consult qualified counsel for guidance specific to your situation. Capital Company is not a law firm and does not provide legal advice.