Starting as RIA with no aum

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Mar 13, 2011 5:51 pm

I am a recent graduate of a top MBA program and took a job working in private wealth management in a big city.  I work mostly alone and target clients with investable assets above $5M.  I haven't landed any clients in my 5 months here, but I have active discussions going with a number of people that could become clients in the next 12-24 months.  I have not been a big fan of the culture of the firm and I feel a lot of pressure to sell the latest structured products, syndicate, and other "hot" products.  I got into the business because I wanted to be a truly independent and objective advisor.  I know that I was a bit naive before joining with this firm, but now I am thinking about what my next step should be.  I am working on level 3 of CFA and hope to pass that in June.  For family reasons, I will likely be moving back closer to family and in-laws.  They live in a mid-sized city of about 1M people.  Is it crazy to think of going independent or RIA without the expectation of having clients to move with?  If I make the jump with nothing but $30k in the bank, how long can I expect it to take before I have a successful, profitable business?  I know it depends on how I do and what I do to find clients, but I am interested in hearing from anyone who has made a similar move without a client base.  Thank you all for your responses.  This forum is great.

Mar 14, 2011 10:25 am

Monday's suck

Mar 14, 2011 10:31 am

[quote=SuperMan]

Monday's suck

[/quote]

FIrst off.. Superman's response was hilarious..

Second... Have no idea...I know of at least 4 people who have started an RIA with no clients and ramped up in the first 2 years.. But it depends on several things 1. Living expenses 2. Ability to bring in assets 3. Ability to supplement with insurance business while ramping up 4. Ability to bring in assets 5. Ability to bring in assets 6. Ability to bring in assets.

Mar 18, 2011 2:19 pm

Wait... what?!  You have an MBA,  are going for level 3 of the CFA, have $30k saved up, experience in the industry, and are headed to a town in which you have contacts?  Good luck in June.  Ace it.  Then get the hell out of the high pressure firm, hang your own shingle, work like hell for a few years and enjoy life.  You've got all the brains you need.  Get a pair to go with it and you're golden. :-)

Mar 18, 2011 2:20 pm

Wait... what?!  You have an MBA,  are going for level 3 of the CFA, have $30k saved up, experience in the industry, and are headed to a town in which you have contacts?  Good luck in June.  Ace it.  Then get the hell out of the high pressure firm, hang your own shingle, work like hell for a few years and enjoy life.  You've got all the brains you need.  Get a pair to go with it and you're golden. :-)

Mar 18, 2011 2:42 pm

Sorry to the original poster, but you've lost your mind. 30k? You'd need more like 300k, trust me, I know the numbers.

Find some guy that is indy, ria, whatever, and learn the ropes and have a good mutually beneficial contract IN WRITING.

Your inability to open one account in 5 months is not a good indication. This business, it is EXTREMELY important to know how to sell, and it's possible that you are not capable of sales. If you're not capable of sales, you'll NEVER get a chance to use your intellect. Intellect is nice, but you don't have any EXPERIENCE either.

Mar 18, 2011 3:18 pm

I would say the sales skills are drawn from experience. Ain't nothing like the real thing, baby.

Of course, a fool and his money are easily parted.

Mar 18, 2011 3:34 pm

Let's not forget, he is targeting clients with $5mm+.  If he goes on his own, he doesn't need to have $5mm/client as his bar.  Jesus, if he landed 2 clients, he'd have a viable business.  I can count on one hand the number of $5mm+ clients I have (just look at my palm).

He will likely be successful landing smaller clients.

Mar 18, 2011 4:17 pm

he<snowballs nearing hell 

Mar 18, 2011 4:19 pm

BFP, you're always just a big ray of sunshine.  Granted it's a, "holy crap, the meteor is headed right for us" kind of sunshine, but sunshine nonetheless.  You speak truth.  I appreciate it... Don't like it, but appreciate it.

Mar 18, 2011 5:31 pm

Thanks for all the responses.  I appreciate the candid and the enouraging feedback.  I am confident that i will succeed in the business, but i know it's an uphill battle. 

Mar 21, 2011 11:58 am

Too many variables in your first post.

First, join the CFA Society in your new city and hit the ground running making connections with professionals.

Lower the $5mm qualification level drastically.

Tenacity. You need it.

Mar 21, 2011 12:30 pm

Thanks Kingpin.

Mar 21, 2011 1:55 pm

aandm114

If you haven't yet, you might check out Mike Patton's blog on Advisor One. The guy started an RIA from $0 AUM, I think he's up to $10mm now. He supplements with Financial Planning fees and Insurance.

There are mixed feelings about him on this board. You may find some of what he says useful.

Mar 21, 2011 10:42 pm

I left my firm 1.5 yrs ago and left all but 3 clients to start my RIA.  You need to control your costs and supplement your business with planning fees and/or insurance as well as lower your $5mm min. 

Put yourself in a clients shoes who has $5mm.... Would you give someone with no AUM $5mm?  Build yourself with small accounts (100k min) and hopefully you can make it work.

As for me in 1.5 yrs I went from 1.6mm (3 clients I brought with me) to 12.5mm.  Raise your fee and lower your standards and it will all work out.  Also cut all expenses not business related! 

Apr 16, 2011 12:09 pm

[quote=Kingpin]

Wait... what?!  You have an MBA,  are going for level 3 of the CFA, have $30k saved up, experience in the industry, and are headed to a town in which you have contacts?  Good luck in June.  Ace it.  Then get the hell out of the high pressure firm, hang your own shingle, work like hell for a few years and enjoy life.  You've got all the brains you need.  Get a pair to go with it and you're golden. :-)

[/quote]

I partially agree with that as someone who became an advisor with an institutional Street background myself.  I started with a wirehouse before going indy last Oct. and unless you can BRING IN CLIENTS, don't let your fancy MBA and being a Level 3 candidate cloud your judgement.  I've seen way too many analyst/finance types flunk out because they spend more time crunching numbers and analyzing standard deviations of hypothetical portfolios than they do acquiring clients.  Your job is very simple - go out and get clients.  That being said, your qualifications and backgrounds are a nice added bonus and selling point to your potential clients, but be careful not to talk over their heads - even with sophisticated investors.

I would never deter you from realizing your goal of starting your RIA - I personally think the RIA/Indy model is the best thing for an advisor and his/her clients.  However, be VERY REALISTIC about your financial situation.  Even if you had an existing book you could start ACAT'ing over to your new RIA, it would take several months before you start making anything close to resembling an income.  You have NO book.  Again, my only advice if you pursue it is make sure your significant other can pay the bills for the next year and work 6-7 days a week like you've never worked before in your life.

Best of luck!

Apr 16, 2011 12:11 pm

[quote=B24]

Let's not forget, he is targeting clients with $5mm+.  If he goes on his own, he doesn't need to have $5mm/client as his bar.  Jesus, if he landed 2 clients, he'd have a viable business.  I can count on one hand the number of $5mm+ clients I have (just look at my palm).

He will likely be successful landing smaller clients.

[/quote]

Yes, another good piece of advice.  One of my old wirehouse managers used to say,  "Elephant hunting is nice, but you need to spend more of your time shooting rabbits and squirrels." 

Apr 21, 2011 3:09 am

I would say the sales skills are drawn from experience. Ain't nothing like the real thing, baby.