Rookie Starting at an RIA vs. Wirehouse
I would like to know what people think about a rookie career changer starting with an RIA like Renaissance Financial as compared to Morgan Stanley. I understand that the two organizations are not exactly peers. If I were to start a career at a place like Renaissance would it be limiting my long term career potential?
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I have read and been told that the industry is moving toward the RIA model. I think a start at a place like Renaissance would allow me to market to all of the wirehouse clients with a product they cannot get at a wirehouse; a complete financial plan. Is this a valid thought?
First, understand that the wirehouse will be offering something that the
RIA will not..... a training program. While they will get you to pass the
necessary exams, and give you some training, it will pale in comparison
to the wirehouse. The RIA model is really designed for people who have
been in the business, developed their book, and already gone in the
direction of fee-based advisory services.
I'm not sure what your role would be at the RIA, but if it's an 'eat what you
kill' mentality and you aren't being asked to become a part of a team,
then the RIA route can be daunting in terms of earning an acceptable
living long enough to survive.
The problem is this - If you join a wirehouse, and THEN decide within a
few years that you would like to join the RIA, it will be very difficult to
sever without some sort of legal action concerning the training costs and
potential non-compete that you'll most likely have to agree to should you
leave to join a competitor. Also, in a situation like this, an RIA is a
standalone firm without the deep pockets and may insist that you hire
your own counsel and pay your own costs concerning the litigation.
You are right, the industry is moving to an RIA format, as most
wirehouses hold also an RIA within their firm. So, the wirehouse MAY be
your best option if you plan on surviving in this business for a long
period of time. I was happy that I had the wirehouse training before I
struck out on my own.... I was trained there, and 13 years later I formed
my own RIA. Wirehouse training was worth it.
I don't think you would be limiting your long-term potential by starting at
the RIA - I DO think that you would be much slower out of the blocks in
terms of earnings, and I'm not sure that most new individuals to our
business have the ability to survive a slow start.
RIA's and wirehouses offer pretty much the same stuff, including financial
plans. They [wirehouses] CAN charge for this, however, many times
market it as an 'investment plan' with future wealth simulations, and cash
flow analysis. Don't be fooled that they are drastically different, when
they are all going for the same result; consulting to the client.
I am very much in favor of the RIA format - I'm just not sure that it's the
right thing to do out of the blocks without a significant amount of proper
Good luck to you -
Given that most of the industry training is product/compliance/licensing, and not something that actually teaches you how to do the job - don't base your decision on whether or not you'll be trained. By the end of your first month - your 'on the job' training will surpass anything you'll get from your friendly neighborhood wirehouse.