Cross Border Referral Programs: Using a Local LATAM Regulated Entity With a US RIA

If your firm already holds a regulated license in its home market, or works with a partner that does, you have a materially better set of options for offering US investing than a firm starting from nothing. The reason is simple: a locally regulated entity can market in its own country. That single fact changes the economics of a cross border program.

We see two versions of this project at NextReg. In the first, a Latin American firm has no local regulated entity, so the US side has to rely on reverse solicitation and the marketing constraints that come with it. In the second, the firm has a local brokerage, adviser, insurer or other regulated institution, and can add a compliant cross border referral arrangement on top of the reverse solicitation framework. This article is about the second version, and why it is worth the additional structuring work.

The Constraint You Are Trying to Solve

A US registered investment adviser can serve non-US clients. What it generally cannot do is run active retail marketing campaigns inside another country without regard for that country's licensing rules. So firms relying purely on reverse solicitation end up with a growth problem: the product is compliant, the funnel is throttled. Every campaign has to be reviewed against the risk that it constitutes solicitation in a market where the US entity is not licensed.

A local regulated entity does not have that problem in its own jurisdiction. It is licensed there. It can advertise, run distribution, hold client relationships and be seen publicly. If that entity can lawfully refer clients to a US registered adviser under a documented arrangement, the marketing happens where it is permitted, and the advisory relationship sits where it belongs.

How the Referral Structure Works

At a high level, three parties are involved: the local regulated entity, the US registered investment adviser, whether your own or NextReg Advisors, which is pending registration with the SEC, and the client. The local entity identifies and refers the client. The US adviser onboards the client, provides the advisory service and holds the fiduciary relationship. Assets are custodied at a US broker-dealer and clearing firm through our custodian partners.

The structuring work sits in the agreement and the controls around it. Under the SEC Marketing Rule, a person who is compensated for referring clients to an adviser is a promoter, and the arrangement carries specific requirements: a written agreement, disclosure to the client of the relationship and the compensation, oversight of the promoter's activity, and a determination that the promoter is not disqualified. Those obligations belong to the adviser, and they are not optional because the promoter is offshore.

On the local side, the analysis is separate and equally important. Can the entity lawfully refer clients abroad under its license? Does its regulator treat that activity as intermediation requiring additional authorization? What must be disclosed to the client in local language? How is compensation characterized for tax and regulatory purposes? These questions are answered per country, with local counsel where the position is not settled.

What This Unlocks

Marketing freedom in the home market. The local entity promotes in its own name, under its own license, in local language and local channels. That is a fundamentally different growth motion from waiting for inbound interest.

Both channels at once. Reverse solicitation does not disappear. A well-built program runs both: inbound clients who approach the US adviser directly, and referred clients who arrive through the local entity. The onboarding flow needs to distinguish between them, because the evidence and disclosure requirements differ.

Trust transfer. Retail and business clients in Latin America are far more willing to open a US investment account when a brand they already know locally stands behind the introduction.

One client experience. When the platform, the adviser and the custodian are integrated, the client sees a single journey from local app to funded US account, not a handoff between institutions.

What the Program Has to Contain

A referral program that survives examination looks like this. A written promoter agreement covering scope, permitted conduct, compensation, disclosure, recordkeeping, termination and supervision. Client-facing disclosure that is delivered at or before the time of the referral, in a language the client understands. A defined list of what the local entity may and may not say, with training and periodic attestation. Review of the local entity's marketing material by the adviser's compliance function. Full KYC, AML and sanctions screening at the US adviser, regardless of what diligence the local entity performed. Country level analysis of solicitation and intermediation rules, updated as local regulation changes. And documented ongoing oversight, because the SEC will ask how the adviser supervises a promoter it does not employ.

Everything remains contingent on local law. A referral program does not override the rules of the client's own country, and it is not a mechanism for avoiding them. It is a way of doing permitted activity in the place where it is permitted.

If You Do Not Have a Local Entity Yet

You can still launch. The reverse solicitation route works, and firms operate real businesses on it every day. Our usual recommendation is to start there under NextReg Advisors' infrastructure once its registration is effective, generate revenue, and add a referral channel later once a local regulated entity or partner is in place. Sequencing matters more than perfection: a compliant program that goes live this quarter beats a comprehensive one that goes live next year.

Why Firms Bring This to Us

This work sits at the intersection of two specialties that rarely appear in the same firm: US adviser regulation and Latin American cross border practice. NextReg operates on both sides. We are a compliance firm, NextReg Advisors is pending registration with the SEC as an adviser you can operate under or model your own on, and our custodian partners provide the trading and custody rails. That means the referral agreement, the disclosure, the onboarding flow and the account opening all get designed as one program rather than assembled from three vendors.