RIA or Independent B/D

or Register to post new content in the forum

 

Comments

  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.
Feb 6, 2010 11:53 pm

I am in discussions with a private equity firm about starting a private wealth management group.  I am curious if anyone has any opinions on whether I should look into setting it up as an RIA or find an Independent B/D.  A few points to consider:

 - I am Series 7 & 66 licensed and currently work for a large independent B/D
 - I will not be bringing any clients so we will be starting from $0
 
I look forward to hearing from everyone
Feb 7, 2010 7:24 am

RIA - low your FINRA licenses.  A lot less headache.

Feb 7, 2010 8:25 am

I agree with Wet_Blanket.  The Independent B/D industry prefers not to work with 'newbies' or people with insufficient past proven production which is going to be a symptom to the death of that model.  Advisors are retiring and if new fresh blood can't join an industry -- the independent b/d business model is going to have some major issues in the years going forward.  Some Independent B/D's, when a Reg Rep doesn't meet their production minimums steer these people to join one of their existing OSJ branches.  Could be a good deal but based on my own experience, these advisors dream is to run their own branch/practice and not report yet under another compliance level.

 
Entering into the RIA world is cleaner and easier to understand for most people.  The ability to do so is also dependent on what type of products and compensation are you most attracted to?  If you see a future for commissions in your practice, then the B/D model is the way to go.  If you envision more of a fee type practice; the RIA route is for you.
 
Whatever you end of doing -- best wishes to you and your new venture.
Feb 7, 2010 9:05 am

Thanks for FVDA.  I gather from review of other post that you are with Trade PMR. I have reviewed your website and Trade PMT looks very good.  Can you give me a little more information on the hybrid model you offer?  From a compliance perspective - what should we expect?  Since this growth out of a private equity firm we find it reasonable to believe thay we should have $20mm in assets by the end of year one.  Additionally we are looking more towards the family office model - any opinion on fees based on NW rather than AUM?

 
 
Feb 11, 2010 1:22 pm

How's the RIA business work?  Do you just need the series 66 or equivalent?  Do you get an OSJ from the custodian?  I know it's only fee based, what are the minimums you guys use to open accounts?

Feb 11, 2010 3:52 pm
Kudlowfan:

How's the RIA business work?  Do you just need the series 66 or equivalent?  Do you get an OSJ from the custodian?  I know it's only fee based, what are the minimums you guys use to open accounts?

First of all, ROOGLE will answer your questions, but I have some down time so here goes.  You can form an RIA with either a S65 or a combination of S66 and S7.  You don't need an OSJ, because you have fired FINRA as your SRO (for now at least) and are only subject to State and/or SEC jurisdiction.  For compliance, you either run it yourself or you can hire a consultant if you choose.  There is no requirement in that regards, other than you stay compliant in case the State and/or SEC pops in for a surprise audit.  You can charge fixed fees, hourly fees, AUM% fees or a combination of all three.  You have a fee schedule that is incorporated into your form ADV which is on file with the regulators, and which you give to your clients.  You can negotiate your fees with your client (generally downward from your stated fees).  Minimum is whatever you choose it to be.