RIABiz reported on November 7 that the SEC's change will move 17,400 practices out of the big RIA category, a jump the outlet described as 40-fold. The outlet also reported an analyst's view that SEC Chair Paul Atkins could use the reclassification to push some of these firms toward state registration. That is the analyst's assessment, not an SEC statement, and the RIABiz page carries an AI-generated label near its byline, so the figures in this article are drawn from the SEC's announcement and the trade press reports cited below.
The SEC announced the amendments on November 4, 2026, a Wednesday, according to InvestmentNews. The rule raises the regulatory assets under management threshold used to identify small investment advisers from $25 million to $1 billion, and lifts the fund net-asset threshold from $50 million to $10 billion, according to a securities.io summary of the announcement. These are asset measures, not prices or revenue. The final rule dropped a $5 million balance-sheet test that the January proposal had kept. According to AdvisorHub, the rule also retains a control-relationship test, so an adviser sharing common control with a manager of $1 billion or more does not qualify as small.
Before the change, only 451 of 15,909 SEC-registered advisers, about 3%, qualified as small, according to the January proposal as reported by AdvisorHub. The agency's figures put the $1 billion level at roughly three-quarters of advisers, yet below 3% of total industry regulatory assets under management. The SEC's adopting release estimates that 11,017 advisers will have to answer small-entity questions in Item 12 of Form ADV, as InvestmentNews reported. AdvisorHub separately reported that the SEC estimates about 10,180 more advisers will now answer those questions. These figures measure different things, so this article uses the 11,017 total from the adopting release rather than RIABiz's 17,400.
The SEC noted that some commenters appeared confused and mistook this small-entity asset threshold for the $100 million threshold that separates federal and state registration, InvestmentNews reported. That distinction is central to the state registration question. A general description of registration rules published by Smart RIA, a secondary source, says advisers generally register with states below $100 million in regulatory assets, may elect SEC registration between $100 million and $110 million, and generally must register with the SEC at $110 million or more.
Schwab's exposure is large. RIABiz reported in March that the proposed rule would classify 14,700 firms as small, up from 4,400 sub-$25 million Schwab practices, or 92% of its custody business. In October, RIABiz described Schwab's RIA custody unit as a $5.8 trillion operation serving about 16,000 practices, a custody asset figure. Schwab's annual filings place its Advisor Services unit among the biggest suppliers of custody, trading, banking and support to RIAs, and say its revenue comes chiefly from net interest revenue and asset management and administration fees. RIABiz identifies Michael Kitces as co-founder of XY Planning Network and reports that he supports the change, which the outlet framed as an unlikely alignment of the SEC, Schwab and Kitces.
The SEC's fact sheet says the small-entity rules were adopted in 1982 and last updated in 1998. The SEC proposed the change on January 7, 2026. SEC Commissioner Hester Peirce described the proposal as a route to a more realistic view of small firms. InvestmentNews reported that Atkins described the change as a step to eliminate unnecessary regulatory burdens.
The Investment Adviser Association, which represents roughly 600 advisory firms and related entities according to Financial Planning, urged the change. The IAA had pressed for years for an update and argued that assets under management is the wrong metric, favoring headcount instead. Its 2026 snapshot counts a record 16,544 SEC-registered firms in 2025, according to InvestmentNews.
The change arrives amid moves in custody. In October, RIABiz reported that Fidelity had reportedly moved to unmoor its sub-$100 million RIAs, and that Schwab's custody head publicly offered them a home. The sources reviewed do not state an effective date for the amendments. The next question, on the analyst view RIABiz reported, is whether the SEC uses the reclassification to press some smaller firms toward state registration. No SEC statement says that.