Episodes

When an advisor is recruited to a wirehouse (or similar type broker/dealer) an "upfront check" is generally involved. These are often referred to as "forgivable loans." While seemingly lucrative, there are, of course, always strings attached. If circumstances warrant the advisor leaving that firm before the forgivable period ends, there is an expectation that some of that upfront check must be repaid. In this episode (#160) of the Transition To RIA question & answer series, I explain logisti...

If you are using lending solutions with your clients, it is understandable that you will need to replicate those solutions if you take a new path with your practice. In the RIA model, solutions like margin loans and non-purpose loans are not only available, but generally come at a significant advantage over your current options. Understanding what's available and how the due diligence process works are common steps when exploring an RIA path. On this episode (#159) of the Transition To RIA qu...

Those of us in this industry all too often use jargon like basis points, ETFs, etc. At times, we forget that people (clients) outside the industry, might not be as familiar with that terminology. Turns out, I am just as guilty regarding the RIA industry. Through my 150+ episodes so far I've answered questions about all sorts of minutiae regarding the RIA model. Yet, it recently occurred to me that I have yet to answer the most straightforward question: "What is an RIA?" On this episode (#15...

The RIA model generally provides far more flexibility with how you can run your practice. Consequently, an exciting part of transitioning your practice to the RIA model is contemplating the services and investment solutions you'd want to offer your clients upon making the transition. Providing insurance solutions to clients is one such option. However, several variables affect whether and how you can offer these solutions. In this episode (#157) of the Transition To RIA question and answer s...

Choosing a custodian to hold your clients' assets is one of the most significant decisions when transitioning your practice to the RIA model. Many variables are involved in deciding which of the roughly dozen custodians best fits your practice. Though just as you would perform due diligence on them, each custodian has its own criteria for which RIAs they will work with. For some custodians, one of those criteria is that the RIA must have a minimum AUM level to use them. However, many nuances ...

Many people think of the RIA model as an "independent" model. This is accurate, as many pathways into the model are independent in nature. However, some RIA models feature advisors affiliated as W2 employees. These come in many different flavors: partnership models, traditional grid payout models, buyout models, etc. In this episode of the Transition To RIA question and answer series, I explain what these models are and when they may be a fit for your practice. Come take a listen! P.S. Pref...

For those that follow my content, I often rant about "TAMPs" and "hybrids." Not that they aren't good solutions, but rather because our industry often uses those terms to refer to offerings that are sometimes not at all similar. (i.e., one "TAMP" provides one type of service, while another "TAMP" has a quite different model.) It is safe to add "aggregator" to my rant list. How some market participants define an "aggregator" firm can sometimes look nothing like how another defines it. In the ...

All affiliation models have pros and cons. They all have red flags to watch out for as well. The RIA model is no exception. Case in point: when someone predominantly touts the "100% payout" of the model. Yes, with your own RIA, you retain 100% of your client fee revenue. But when someone loudly touts the top line without also explaining the expenses required to generate that revenue, that is generally a red flag. On this episode (#153) of the Transition To RIA question and answer series, I a...

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? After all, it's often used to describe several different logistical scenarios. In this episode (#1...

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 RIA question & answer series, I break down the licensing scenarios to be aware of. Come take a lis...

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 To RIA question & answer series, I explain the pros and cons of the RIA model. Come take a lis...

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, and which solution providers to use. In this episode (#149) of the Transition To RIA question & ...

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 question and answer series, I explain what you should expect to pay (or not) for custodial services...

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 servicing HNW and UHNW clients? Can such clients be accommodated the same, or even better, in the...

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 Transition To RIA question and answer series I explain the variables that determine the timeline for reg...

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, regardless of their current affiliation model, have at least one (if not multiple) reasons to need su...

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 only consider broker-dealer solutions. That is a classic case of the tail wagging the dog. With a...

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 then, what makes sense for one advisor, might not make sense for another. On this episode (#14...

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 distinguish one RIA from another. Some RIA offerings will be of no interest to you, whereas other...

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 your transition) is the easier route to take to get into the model, versus going through the proc...

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 something that will impact the balance of their career. In this episode of the Transition To RIA ...

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 of year that advisors/teams generally seek to avoid making a transition during. On this episode (...

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 and solution provider resources; If applicable, provide solutions for your remaining legacy co...

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 river only run in one direction? In this episode of the Transition To RIA question & answer serie...