Transition To RIA Podcast

Episode notes: The Registered Investment Advisor ("RIA") model remains the fastest growing channel in the industry, with no indication the trend will slow anytime soon. Year after year, financial advisors seek out the better economics, flexibility, and higher enterprise valuations afforded by the model. With such advantages, why don’t even more advisors (than already are) make the transition with...

There are many misconceptions about the RIA model. You can’t take your legacy commission business with you…..false. You’ll spend all your time on compliance…..false. You can’t use alternative investments…..false. The technology is inferior…..false. I could go on and on. In this episode of the Transition To RIA question & answer series, I address another falsehood: You can’t accommodate clients...

Imagine I challenged you to a one-on-one game of basketball. We each use the same equipment. The rules of basketball apply to both of us. One caveat: You must play with one arm tied behind your back. Sound fair? Or an unfair advantage? If such a scenario seems preposterous, consider if you’re currently a one-armed player as an advisor. The Registered Investment Advisor ("RIA") model provides finan...

Want to know the dirty little secret of real estate expense for advisory practices? You need to pay for the expense of your office as a fixed cost, not a variable cost via your payout. The difference in approaches, particularly if you own your office building, could potentially result in millions of additional dollars to your net worth by the time you retire. In this episode I discuss why and how...

What is a corporate RIA? You're possibly already affiliated with one and don't realize it. Worse, you could be affiliated, and don't realize if it's even competitive or not. As the trend to fee-based advisory relationships continues, the concept of a "corporate RIA" will become increasingly prevalent. In this episode of the Transition To RIA question and answer series, I explain how corporate RIAs...

I am frequently asked how the economics of the Registered Investment Advisor ("RIA") model compare to the broker/dealer model. The first step in a comparison is to calculate your existing broker/dealer payout. However, you can't simply refer to a payout grid table, and conclude that is your payout. There is a reason advisor compensation plans generally run 20+ pages! What eventually flows to your...

Ever been told you shouldn't go the RIA route because you won't get any support? You'll be on your own? You'll be so busy doing administrative tasks you won't have time to be an advisor? Often, the people making such declarations have ulterior motives. Perhaps it's a branch manager, or home office executive that doesn't want to lose you from their firm. There is an entire ecosystem supporting the...

It doesn’t happen often, but I do get asked……can I have foreign clients as an RIA? This is relevant if you have such clients in your current affiliation model, or you aspire to add them to your clientele upon transitioning to the RIA model. Similar to if you’re at a broker/dealer now, the answer is generally….it depends. In this episode of the Transition To RIA question and answer series, I explai...

There are two ways to improve the profitability of a business. Increase revenues or decrease expenses. Preferably, you do both. The RIA model provides far greater flexibility than any other advisor model with your ability to impact each. How you manage that flexibility is what determines your bottom line. In this episode of the Transition To RIA question & answer series I discuss how to maximi...

There are two ways to grow an RIA. Organically from expanding existing client relationships and bringing on new clients. And inorganically, from acquiring practices and/or attracting advisors to join your RIA and bringing their clients with them. When doing the latter, it is important to understand the competitive landscape and what is expected of joining advisors. In the latest episode of my RIA...

I admit it, I critique the wirehouse brokerage model a LOT. Considering how much it contrasts with the RIA model, there’s lots to be critiquing! What if the wirehouse model could be improved though? In the latest episode of my RIA question and answer series, I discuss 8 ways the wirehouse model could become more competitive with the RIA model: Think of your advisors as your clients. Tell your advi...

Walk into a hair salon and ask the stylist if you need a haircut. Any guesses what their answer will be?! The same can be said depending on who you ask about the timing of transitioning your practice to a new firm or affiliation model. In this episode of the Transition To RIA question & answer series I help you block out the noise, and focus on the variables that matter. Who you should listen...

An important role financial advisors perform for their clients is to help them avoid mistakes with their financial well-being. Likewise, when advisors transition their practice to the RIA model, there are mistakes that should be avoided as well. In the latest episode of my RIA question and answer series, I discuss five common mistakes to be aware of and to avoid: Mistake #1 - You don’t obtain lega...

Several independent broker-dealers have introduced “IAR-only” affiliation options. Is this something you should consider for your own practice? In this episode, I address 5 topics related to these new channel offerings: What is an IAR-only affiliation option? Why are broker-dealers creating them? How do these IAR-only channels compare to alternatives in the marketplace? Who will these IAR-only cha...

Don't confuse the expenses of running an RIA as being "new" expenses compared to what you have now. Depending on your current affiliation model, you are likely already paying these expenses, they are just embedded in the payout you receive. In the RIA model, you have much more control over how to manage these expenses.....TO YOUR BENEFIT! In the latest episode of my RIA explanatory series, I discu...

I have a lot of conversations with advisors that are in the wirehouse W2 type model, who want to move into a more independent model. Sometimes the default reaction they have is, "Maybe I should go into the independent broker-dealer model first and then move into the RIA model later." The phrase I sometimes hear is, "Maybe it's a step too far to go from this employee model I’m in now, all the way t...

A common misconception about the Registered Investment Advisor ("RIA") model is that you must be 100% fee-only to transition your practice to it. Most advisors, at the time of transitioning, are in fact not 100% fee-only. Many never plan to be going forward either. While the assets under the RIA itself are fee based accounts, there are several solutions to accommodate the existing commission part...

Are you a financial advisor at a wirehouse (or W2 firm) currently? Are you considering moving your practice to one? There are fundamental differences in the business model of a wirehouse firm, and the RIA model. In the latest episode of my RIA explanatory series I explain these differences and how they impact you, and your clients. Topics include the differences in: Compensation Technology Complia...

At it's core, transitioning to the RIA model is simply an exercise in identifying what your current firm provides for you, and determining how to replicate those resources on your own. Technology is a key part of that. In the RIA model, the various technology solutions needed to run a modern day advisory practice, are brought together into a "tech stack". In the latest episode of my RIA explanator...

Every Registered Investment Advisor is required to have a named Chief Compliance Officer (CCO). Whether you are thinking of starting your own RIA, or already have one and would prefer to outsource more of the compliance responsibilities, an outsourced CCO solution is worth considering. In the latest episode of my RIA Question & Answer series I am joined by Jeff Chapman of Dinsmore Compliance S...

You’ve likely heard of a TAMP before, but what exactly is it? The definition of a Turnkey Asset Management Program has expanded to the point where one “TAMP” solution can vary significantly from another “TAMP” solution. So much so that some TAMPs arguably should no longer even call themselves a TAMP at all! Is a TAMP something you should consider for your practice? Are you already using a TAMP and...

If at some point in the trajectory of your advisory practice you envision changing firms or affiliation models, it's important to understand what the Broker Protocol is. The Protocol For Broker Recruiting, as it is formally known, was started nearly 20 years ago by three firms seeking to reduce the litigation risk and costs of advisors changing firms. While the core protections remains the same, t...

Are you a financial advisor at a broker/dealer? Are you getting good value in return for the revenue you generate for your firm? If you don’t fully understand how much revenue advisors generate for broker/dealers in the first place, how would you know? There is a lot more to it than just payouts alone. In the first episode of the new year of my RIA question & answer series, I explain how broke...

In a slight pivot to my normal format, in the most recent episode of my RIA Question & Answer series, I sat down with long time industry observer, Bob Veres and challenged him with 10 questions related to the future of the RIA model: 1) If you were standing in the front of a room of wirehouse advisors and one of them stood up and asked you what you thought of the RIA model, what would you say...

There are more variables involved in choosing a custodial partner than most people realize. In the latest episode of my RIA explanatory series, I address 11 different variables you will want to consider before making such a decision. Some of the variables are table stakes, that you should expect from any potential custodial partner. Other variables are what differentiate one custodian's value prop...