RIA vs B/D

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Nov 15, 2005 11:35 am

We are currently going through our semi-annual NASD audit of business
practices.  There are only 4 of us in our offices and we have 2
NASD auditors in our offices for the week reviewing everything. 
Just about every hour they find the smallest detail and make an
announcement that we aren't following our written rules closely
enough. 



Anyone else own or operate a B/D?  We are seriously considering
dropping them and just going with the RIA format.  No
audits!  Anyone else make the conversion?

Nov 15, 2005 12:34 pm

NASD sucks.  For them it's not about preventing advisors from hurting the public, it's whom they can catch to charge a fine against them....just follow the money...

Nov 15, 2005 1:00 pm

I'm asking myself the same question.  I don't know about the compliance (cost) aspect of RIAs.  We may be jumping from the kettle into the fire? I'm tired of having to run all promotion, e-mail, mailers, etc., thru the "sales prevention dept". 


I'm reading an article in IA about starting your own open-ended mutual fund.  A turnkey fund service provider costs around $40,000 a year.  

Nov 16, 2005 11:10 am

I don't see how starting a mutual fund would lighten the regulatory
load.  If anything I could see it piling on the load.  I know
a guy who started a fund and every client gets a small part of their
portfolio put into the fund.  It really hurt his credibility with
his clients I've spoken with about it.  He runs a great business
but I think that mutual fund is holding him back.



We are a small firm and will eventually do away with our own B/D and
switch to another firm we've already agreed upon - it's just whether
moving everything to our own RIA wouldn't be a better solution. 

Nov 16, 2005 2:04 pm

Its not an endorsement, just coincidence that I was reading that article while considering all the alternatives outside of the B/D structure. 


What kind of regulations would apply under your own RIA?  Unless its changed, I remember that the SEC doesn't require registration if your assets AUM are under $25 M.  

Nov 16, 2005 6:07 pm

I don't know - I would be state registered at first and am starting the process of getting into that.

Nov 16, 2005 10:36 pm
skeedaddy2:

Its not an endorsement, just coincidence that I was reading that article while considering all the alternatives outside of the B/D structure. 


What kind of regulations would apply under your own RIA?  Unless its changed, I remember that the SEC doesn't require registration if your assets AUM are under $25 M.  



Over 25m you have to register with the SEC.  Under 25m you have to register with the state authorities....