Fewer advisory firms make the switch to state oversight

It looks as though fewer advisory firms than expected will be making the switch to state registration. As of April 5, just over 1,900 advisory firms that are currently registered with the Securities and Exchange Commission had indicated that they were no longer eligible for SEC registration, according to agency spokesman John Nester. That's well below the latest estimate of 3,200 firms that regulators expected would be making the switch. Advisers had to file an updated ADV form with the SEC by March 30, indicating whether they met the new asset threshold of $90 million to remain SEC-registered. The final number of advisers switching could still change as the SEC continues to work through the numbers, sources said. Some advisers completed the switch last year, so they may not be in the latest tally, observers said. Under the Dodd-Frank Act, advisers with less than $100 million in assets under management must register at the state level. However, advisers currently overseen by the SEC have a $10 million buffer, making the effective minimum for them $90 million. Most SEC-registered advisers wanted to remain with the agency and many have worked to add assets to ensure meeting the threshold, observers said. Advisers had 90 days prior to filing their updated ADV to calculate the market value of their assets under management. The strong market during the first quarter likely helped many firms on the cusp make the SEC minimum. “Some [advisers] worked on really building up their businesses, but the markets definitely helped, especially in March,” said consultant Cindi Hill of Hill Compliance Advisors.