Welcome to the last in our three-part series on transitioning to independence. In this issue, we discuss your actual move and the many things you need to think about as you prepare to take the leap to independence. Read on for some valuable insight from Jennifer Gitto, Transition Specialist at
TD AMERITRADE Institutional.
Q: Once I’ve committed to actually making a move, how long does the process take?
Gitto: The time frame varies based upon which path you choose—that is whether you are starting your own RIA or joining an established firm. Establishing your own firm requires a bit more planning. Timing can also be affected by the type of firm you are leaving. For instance, if you’re coming from an independent broker/dealer, you can be up and running in a matter of weeks because you may already have an existing RIA business in place.
It may take slightly longer if you are starting a new fee-only RIA from a wirehouse environment because you have to define your business and goals, choose a business structure and possibly create and purchase a physical office space. Also, you need to spend time developing a new brand and identity and infrastructure for your new firm, as well as implement technology and address outsourcing and staffing needs.
If you have decided to join an established RIA firm, you can hit the ground running because many of the requirements for setting up a small business have already been taken care of. This will minimize some of the steps.
When you are starting out, everything may seem a bit overwhelming, but remember, you do not have to do it alone. At TD AMERITRADE Institutional, our consultative, advisor-centric approach is designed to support you through every step of the transition.
Q: What are the biggest things advisors forget about during this phase?
Gitto: Advisors going independent often neglect to contact legal help right away. That can cause problems and setbacks with their transition because they need to be fully aware of all the legal and compliance issues they’ll be facing when transitioning.
Assuming you’re starting your own firm, it’s important to complete the necessary paperwork to establish your new business as a legal entity and then register the firm properly (either with the SEC or through a state registration). In addition, you have to file a form ADV, or if you’re joining an existing firm, you’ll have to update the existing ADV. Your legal counsel will also help establish procedures and policies to meet your legal requirements and give guidance on the types of business insurance you might need.
Advisors also often forget to leverage the expertise of their chosen custodian who can help them prioritize what needs to be done for their move. It is really helpful to have someone helping you monitor your transition from beginning to end. Advisors who fall short on the planning tend to have a harder time with the transition. TD AMERITRADE Institutional offers comprehensive resources, tools and consultants to help ease the transition.
Q: What key tasks or areas of my future business do I need to think about when making a move?
Gitto: It is first important to indentify the types of services and products you will offer. Do you want to offer comprehensive financial planning and wealth management, family office and concierge services, or strictly asset management? Many of your future decisions and tasks will be based on how you plan to set up your business.
In terms of technology, you will need to evaluate vendors to help meet your software needs like customer relationship management, document management, portfolio management and financial planning.
On the infrastructure side, you will need to choose office space that is adequate for your staff and complements your approach to client interaction. You'll also need to consider office furniture and decorations. From a hardware and infrastructure standpoint, you'll need to think about buying or leasing computers, mobile devices, copiers, faxes, and phones, among other things. You will also need to consider your HR needs such as a payroll and accounting system and benefits, as well as policies and procedures.
Again, the key is to work with a transition consultant who can help make the process less overwhelming and lay out all the tasks that are specific to your business goals and objectives.
Q: What about the actual transfer of accounts?
Gitto: For starters, make sure that you involve your legal counsel in this process to dictate the proper next steps and ensure that your legal responsibilities are met particularly as it relates to confidential information and client accounts.
The actual account transfer process involves document preparation and monitoring the movement of accounts. This is something you should not have to do alone. At TD AMERITRADE Institutional, our dedicated Account Transfer Team can help ensure the seamless transfer of accounts through a dependable five-step process (firm qualifications apply).
Jennifer Gitto is a Transition Specialist at TD AMERITRADE Institutional, Division of TD AMERITRADE Inc., member FINRA/SIPC.
This is not an offer or solicitation in any jurisdiction where we are not authorized to do business. Past performance of a security does not guarantee future results. All investments are subject to investment risk, including possible loss of the principal invested. The foregoing does not constitute legal advice. You are urged to consult legal counsel for your specific situation.
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