Only For Established RIA's - Need a straight forward answer

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Jul 2, 2010 4:47 pm

I am researching going indy and I keep hearing how much time compliance takes and how I don't want to spend the time bothering with this (usually from people, like my existing bd or new ones that don't want to see me go indy).  The truth is I have no idea how much time or headache compliance will be.  I have done a ton of research in the past year and half and have calculated the cost of going indy (E&O, custodian fees, software, initial setup/registration etc) but want an honest answer of what I would be up against compliance wise.  Outside of having all my advertising and correspondence approved and having an annual mock site audit, what else can I expect?  Hoping someone can tell me if this talk of compliance is a scare tactic or if it is legitimate.  Thanks in advance.

Jul 2, 2010 6:18 pm

A short answer is that the scare tactics are probably reasonably accurate if you establish your own RIA from scratch.  If you go indy with a decent b/d, it is not that big of a deal.  You have to keep track of more, but you have the existing structure of the b/d to help you along.   The tradeoff is that you give up 10-15% of your gross to the b/d (but you'd have some fixed costs for RIA that you may not with a b/d).

Jul 5, 2010 1:55 pm

They are all scare tactics.

Indy b/ds use scare tactics too to prevent people from going RIA.


Contact Fred at TradePMR.  You won't find a more honest person to give you the scoop.

Jul 6, 2010 11:01 am

thanks for the feedback.  I assumed this was the case but wanted to be sure.

Jul 7, 2010 10:44 am

Thanks for the nice feedback.  Yes, I would venture to say be mindful of who is providing the answers -- do they have an alterior motive running in the back of their mind?  I would suggest speaking with a compliance consultant; an independent 3rd party person. 

I question how beneficial would a B/D Firm Executive be when asked by a Registered Rep, "I'm thinking of going RIA -- can you help?"  Perhaps some B/D's might answer this in a very honest fashion but some might, for fear of losing the Reps revenues, paint the RIA world in well, "less than a truthful light."

Do your homework so you can make an informed decision on your own. 

Glad to help in any way I can.