A registered investment adviser cannot simply move client money into a startup or a private fund on a handshake. RIA private markets access for clients almost always runs through a structure built for that purpose: a feeder vehicle, a single-deal SPV, or a sub-advisory arrangement that pools several clients into one line on a company’s cap table.
Most RIAs that offer private deals form or use a special purpose vehicle for that specific investment. Clients who meet the deal’s investor requirements subscribe into the SPV, and the SPV holds one position in the underlying company or fund. The adviser still owes each client the same fiduciary duty that applies to any other recommendation, private or public.
This guide covers why RIAs favor a feeder SPV over a direct client investment, what fiduciary duty and the custody rule require, and how a client’s accredited investor status gets confirmed before a subscription closes.
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Why RIAs use a feeder SPV instead of a direct client investment
A feeder SPV turns a group of client checks into a single line on the target company’s cap table, instead of one line per client. That matters to the company issuing the securities, which usually wants a short, clean investor list, and it matters to the adviser, who can pool allocations that would each be too small to meet the underlying deal’s minimum on their own.
| Client invests directly | Client invests through an RIA feeder SPV | |
|---|---|---|
| Line on the company’s cap table | One line per client | One line for the whole group |
| Minimum check size | Set by the underlying deal | Can be pooled below the deal’s minimum |
| Tax reporting | Client gets the underlying entity’s own K-1 or 1099 | Client gets a K-1 from the feeder SPV |
| Who signs the subscription documents | Each client, individually | The SPV manager, on behalf of the group |
The tradeoff is an added layer of fees and paperwork: the feeder SPV has its own formation cost, its own annual maintenance, and its own tax return, on top of whatever the underlying deal charges. For a broader look at when a pooled vehicle makes sense at all, see Fund vs SPV: The Strategic Choice.
Fiduciary duty applies the same way it does to any other recommendation
An RIA owes every client a fiduciary duty of care and loyalty under the Investment Advisers Act of 1940, and a private placement does not get a lighter standard because it is illiquid or exclusive. The adviser needs a reasonable basis for believing the investment fits the client’s objectives, time horizon, and capacity to hold an illiquid position for years. Conflicts have to come out in the open, including when the SPV sponsor is the adviser itself, an affiliate, or someone who pays the adviser a referral fee. A client who is already concentrated in one industry or one employer’s stock needs that fact weighed before another private position gets added on top.
The custody rule question when the RIA controls the vehicle
If the RIA or a related person manages the SPV that holds the clients’ interests, the adviser is treated as having custody of client assets under the SEC’s custody rule, even though no client cash ever touches the adviser’s own bank account. The rule lets an adviser skip the surprise examination if the pooled vehicle’s financial statements are audited every year by an accountant registered with, and inspected by, the Public Company Accounting Oversight Board, and distributed to investors within 120 days of the SPV’s fiscal year end.
Confirming a client meets the accredited investor definition
An individual generally qualifies as an accredited investor with income above $200,000 (or $300,000 with a spouse or spousal equivalent) in each of the last two years and a reasonable expectation of the same this year, or a net worth above $1 million excluding a primary residence. Holding a Series 7, 65, or 82 license also qualifies. An RIA usually already has income and net worth information from the client’s financial plan, which can support a reasonable belief for a private offering that does not use general solicitation. A more public offering needs stronger proof, such as a document review or a letter from a CPA, attorney, or another RIA confirming the client’s status. For more on who else can subscribe alongside those clients, see Who Can Invest Into SPVs?
What goes in Form ADV and the deal documents
An adviser that regularly places clients into private deals should describe that business in Form ADV Part 2A, along with any compensation an affiliated sponsor earns from the vehicle, such as carried interest or a management fee. The feeder SPV needs its own subscription agreement and a deal summary that discloses the underlying company’s risk factors as the sponsor understands them. None of this is a substitute for the client’s own review; an adviser should never suggest that a subscription through the firm carries less risk than the same deal offered any other way.
Choosing between a private offering and a public one for the feeder
Most RIA-organized feeder SPVs rely on the private offering exemption, since the adviser already has a relationship with each client and never advertises the deal publicly, an approach covered in more detail in Mastering SPVs for 506(b) Funds. That keeps verification simple: a reasonable belief, built on the client’s existing file, is generally enough. An adviser that instead markets an opportunity broadly, on a webinar open to the public or a firm blog post naming the company, has to satisfy a stricter standard that requires verifying every investor’s accredited status through documents or a third party rather than relying on a client questionnaire.
Common mistakes that create regulatory exposure
- Recommending a private deal that does not match the client’s stated liquidity needs or risk tolerance.
- Letting an affiliated sponsor’s fees or carry go undisclosed in Form ADV or the deal materials.
- Treating a signed self-certification as enough proof when the offering was marketed publicly.
- Skipping the custody rule analysis because no client cash passes through the adviser’s own account.
- Assuming a foreign client automatically meets the US accredited investor definition without checking.
Pooling several advisers’ clients into one syndicate raises the same due diligence questions discussed in Unlocking Growth: The Power of Co-Syndication in Private Investments, since each adviser in the group still owes its own clients the same fiduciary duty independently.
Frequently asked questions
Can RIAs invest in private equity?
Yes. An RIA can recommend private equity, venture, or other private deals to clients when the investment fits the client’s objectives and the adviser meets its fiduciary and disclosure obligations. Most RIAs use a feeder SPV or a similar vehicle rather than direct client subscriptions.
How do RIAs get access to alternative investments?
Through relationships with fund sponsors, syndicate leads, and platforms that run SPVs, or by forming their own feeder vehicle for a specific deal. Access usually depends on the adviser’s network and on clients meeting the underlying deal’s investor requirements.
What are the rules for RIAs recommending private placements?
The core rules are fiduciary duty under the Investment Advisers Act, disclosure of conflicts in Form ADV, and, if the adviser controls the pooled vehicle, the custody rule’s audit or surprise examination requirement. The underlying securities offering also has to fit a valid exemption from registration.
Does an RIA need to verify every client is accredited?
Only when the offering relies on an exemption that requires verification, generally because it involved public marketing. A private offering to existing clients can often rely on a reasonable belief built from the client’s file instead.
Running the feeder SPV on Syndicately
Syndicately forms and administers the SPV an RIA uses to pool client capital into a single deal: entity setup, investor onboarding with KYC and AML checks, help confirming accredited status through documents or a CPA letter, subscription agreements with e-signature, rolling capital calls, and Form 1065 and K-1 preparation with a third-party provider. Syndicately does not manage the underlying deal or give legal, tax, or investment advice. See how the platform supports adviser-led SPVs.
This article is general information, not legal, tax, or investment advice. Fiduciary and custody obligations depend on the adviser’s specific facts, so speak with securities counsel before structuring a feeder vehicle. Sources: 15 U.S.C. 80b-6, 17 CFR 275.206(4)-2, and 17 CFR 230.501.
