Transition To RIA Podcast

Every couple of years, a buzzword seems to rise up to become the industry's token topic. There was an era when "TAMP" was the sexy talk of the day. About 10 years ago, "hybrid" was all the rage. While these terms are still used today, past hype has sometimes caused confusion about when and how to use them. Case in point, should you join a "hybrid" RIA? But what does "hybrid" really even mean? Afte...

In most scenarios, passing the Series 65 exam is the prerequisite to become licensed as an Investment Advisor Representative. However, there are scenarios where the 66, a CFP, or maybe even a 7 are still applicable. It's important to understand how your practice profile, both today and going forward, impacts the licenses you may need in the RIA model. In this episode (#151) of the Transition To RI...

There is no golden goose when it comes to affiliation models in the wealth management industry. Wirehouses, independent broker-dealers, RIAs all have pros and cons. Anyone who suggests otherwise is either ill-informed or being disingenuous. So when considering pathways for your advisory practice, it's important to understand how those pros and cons compare. In this episode (#150) of the Transition...

A misconception about the RIA model is that certain investment solutions such as variable annuities and alternatives (alts), are unavailable for client use. That is incorrect. Regarding variable annuities, you can generally continue using new products going forward while also accommodating your existing legacy positions. It's a matter of understanding how the options work, the logistics involved,...

Whether you start your own RIA, or join an existing one, choosing which custodian to use is an important part of the decision process. As with choosing most solution providers for your practice, many variables should be evaluated. Price is one of them. So how much does a custodian cost? For better or worse, there is a very nuanced answer to that. On this episode (#148) of the Transition To RIA que...

Over the past decade, all the (now tired) excuses for why advisors shouldn't move to the RIA model have fallen. To name a few: "The technology is not as good." "You won't have access to the same level of investment solutions." "Clients want the big brand name on the door." Not only are these arguments no longer true, but the RIA model now generally provides a superior solution. But what about serv...

I am often asked how long it takes to register an RIA. The simple answer is typically 45-90 days, though in some scenarios it could take significantly longer. Equally important is knowing when (and how) to file in relation to when you plan to launch your firm. Furthermore, this is just one step in an overall transition process that typically takes 6-9 months. On this episode (#146) of the Transiti...

When I explain to advisors they likely will want legal advice regarding navigating their departure from their current firm, I sometimes hear a range of responses: “My buddy left the firm last year, and I’m just going to follow what he did.” “I’m already independent, so none of that applies to me.” “I made a transition 7 years ago, so I already have it figured out.” In reality, most advisors, regar...

I often encounter a phenomenon with long-tenured advisors. As they've been born and bred at a broker-dealer, they simply assume they always need a broker-dealer. And these are advisors whose practices have become nearly, if not entirely fee-based. Yet their ingrained DNA tells them a broker-dealer is still required. So when considering transitioning their practice to an independent model, they onl...

What is the minimum AUM needed to have your own RIA? Beware of anyone that gives you an immediate answer, with an immediate AUM figure to that question. There are often bias or ulterior motives behind such quick declarations. While the regulatory answer is $0 AUM needed to start an RIA, there are reasonable arguments to be made regarding at what AUM level it begins to make sense to do so. But even...

There are multiple pathways into the RIA model. Each with pros and cons. One of the pathways is to join an existing RIA. When I first note the latter to advisors, there is often a misconception about what that entails. I’ll often hear… “I don’t want to sell my practice.” That “flavor” of RIA exists, but it’s by no means the only flavor available. In fact, there are over a dozen variables that dist...

Should you register a new RIA, or simply buy an existing RIA? If you are considering transitioning your practice to the RIA model, you have multiple pathways to choose from. Some advisors conclude they want to have their own RIA, others conclude joining an existing RIA offering is the better fit, etc. If having your own RIA is your chosen path, you might wonder if simply buying an RIA (as part of...

Every year many financial advisors transition their practice from one wirehouse to another. Provided they’ve done their research and concluded that such a path was best for them, their practice, and their clients, there is nothing wrong with that. All too often though, that research does not include understanding all potential options. Thus, they end up making a less than informed decision about s...

If you were to transition your practice to the RIA model, is there is an ideal time of the year to make the change? Before considering calendar variables, though, you first want to consider factors pertinent to your unique scenario including potential vesting cycles on deferred comp, tranches on forgivable loans, etc. It is then important to be aware of, and understand why there are certain times...

While it is not always referred to as a "1099 model", there is a type of RIA platform offering that many advisors find to be an attractive alternative to running their own RIA. These "1099 models" come in various flavors but they typically share the following (among other things): Retain 100% ownership of your practice; Use your own brand; Control your local expenses; Access a suite of technology...

We often hear about “breakaway” advisors. That is commonly understood to refer to wirehouse advisors “breaking away” to setup their own independent practices. It’s one of the main reasons the RIA channel has been, and continues to be, the fastest growing channel in the industry. But why do we never hear about independent advisors going in the other direction to the wirehouse model? Why does the ri...

A typical RIA “tech stack” is comprised of 3 core pieces of software: CRM Financial Planning Portfolio Management But what exactly does the generic sounding “portfolio management” tool do? Considering it is typically by far the most expensive piece of a tech stack, it’s important to understand the role it would play in your practice. In this episode (#136) of the Transition To RIA question and ans...

Choosing a custodian to hold your client assets is one of the most important decisions you’ll make when transitioning your practice to the RIA model. While it might at first seem as simple as picking from the “Big 3” (formerly “Big 4”) custodians, the reality is there are close to a dozen custodial providers to potentially choose from. Differentiators amongst them include: AUM minimums, pricing, a...

In this episode (#134) of the Transition To RIA question & answer series we expand upon five critical ways advisors can make mistakes when transitioning their practices to the RIA model, and how to avoid them: Not thoroughly researching the RIA model to understand if it is a fit for your practice; Not thoroughly researching your options of how to transition into it; Misjudging your client loya...

There is a well established process for how to breakaway from a wirehouse, to transition your practice to the RIA model. This process has been refined within the industry over many decades, and thousands of transitions. In this episode (#133) of the Transition To RIA question and answer series I outline the three main steps involved, and the variables within each step that are important to be awar...

Attracting new clients is the lifeblood of any advisory firm. One of the advantages of transitioning your practice to the RIA model is the increased flexibility (as compared to most captive advisor models) in how you can brand and market your services. An example is the ability to establish paid referral relationships with, typically, centers of influence. These are referred to as solicitor agreem...

Being able to control your so-called “local expenses” as an RIA, or 1099 when joining an RIA, comes with additional responsibilities, but also significant benefits to match: Only pay for the resources you actually use. The ability to run as lean or extravagant of a practice as you wish. Determine the composition of your team. Benefit from controlling your local real estate footprint. On this episo...

Should you consider joining a “roll-up” firm? But what exactly are they rolling up? All of your practice? Some of your practice? Do they take operational control of your practice? Is this a succession play? As I frequently lament about the term “hybrid” as well, the term “roll-up” is often used to describe different types of RIA firms, providing very different solutions for advisors. In this episo...

“You won’t be able to use Alts (alternative investments) if you transition to the RIA model.” “Ok, maybe that’s no longer the case….but you won’t have access to as many investment options as we have in the large broker/dealer world.” “Well….maybe that’s no longer true either, but our large scale gets us better availability/pricing than the RIA space.” “Damn it…..that’s no longer true either. You R...

A benefit of transitioning your practice to the RIA model is gaining access to a wider array of investment solutions, technology offerings, and service providers. But with some variables of your practice, you might desire to maintain a status quo. Advisors that currently outsource their asset management to 3rd party models or managers often prefer to maintain similar solutions upon transitioning....