RIA vs. Independent Rep

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Jan 15, 2008 11:05 am

What are the differences?  Which would be the ideal way to go?  Thanks.

Jan 15, 2008 12:25 pm

RIA is ideal IMHO, but may or may not be best in your particular situation.  (I was not able to take the full step to RIA.

Jan 15, 2008 1:26 pm

Gad- you're casting pearls before swine.  Search his posts and you'll see what I mean.

Feb 2, 2008 3:05 pm

With B/D you SELL with no fiduciary obligation

With RIA you manage with fiduciary obligation
 
Ideal Solution:
Hybrid Independent B/D (not owned by public shareholders, not affiliated with an insurance company) and Independent RIA (with an ADV unique from the B/D's ADV)
 
Feb 2, 2008 3:59 pm
finadvnj:

With B/D you SELL with no fiduciary obligation

With RIA you manage with fiduciary obligation
 
Ideal Solution:
Hybrid Independent B/D (not owned by public shareholders, not affiliated with an insurance company) and Independent RIA (with an ADV unique from the B/D's ADV)
 



finadvnj, you shouldn't offer advice until you know what you're talking about.  As it is, it sounds like you now just enough to not know what you don't know.  That's a dangerous position from which to offer advice.

You clearly only have a partial grasp of the legal and regulatory distinctions between RIAs and B/D'ers, and that will lead someone into trouble.  Further, there is no single "ideal solution" for everyone.  It depends very much on what type of business model and strategy they prefer.

If you really want to understand this issue clearly, start by researching more about what b/d'ers and their registered reps may be paid for (securities transactions) and why they are subject to a different regulatory framework and body than RIAs, who are compensated in a different way (fees) for a different  reason (advice).

Then recognize that an independent b/d'er (there is no such thing as a 'hybrid' independent b/d'er, although there is such a thing as a hybrid RIA, which is also affiliated with a b/d) is NOT considered independent based on whether it is publicly owned or not.  Ask LPL, the largest independent b/d, which also happens to be publicly owned.  Nor does a B/D even HAVE an ADV, unless they also own an RIA, which itself needs an ADV, not the B/D.   I could go on, but I don't have the energy to belabor this.

But other than that ...

Feb 4, 2008 8:06 pm

you shouldn't offer advice until you know what you're talking about. 

 
>>Ask LPL, the largest independent b/d, which also happens to be publicly owned. 
 
Really, what is their symbol?
Feb 5, 2008 1:33 am

It depends on your definition of publicly owned is.  They're not publicly TRADED at this time, but I would define publicly-owned as having outside ownership and they certainly have that.  They've also given stock to the larger producers (no, I don't have any...).  The last I heard, a 2009 IPO was possible...I'll get back to you with the symbol when we know it, but I'm betting on LPLF.