Talking To Clients About Breaking Away

For the past six months or so, big wirehouse advisors (with $100 million in assets or more) have increasingly been asking us about joining RIA firms. This has been accompanied by a similar increase in the number of advisors seeking to have compelling and meaningful discussions with their clients about the benefits of joining an RIA firm.

For the past six months or so, big wirehouse advisors (with $100 million in assets or more) have increasingly been asking us about joining RIA firms. This has been accompanied by a similar increase in the number of advisors seeking to have compelling and meaningful discussions with their clients about the benefits of joining an RIA firm. But many of these advisors are just beginning to stick their toe in the proverbial water and so don’t yet fully understand what is involved in establishing themselves as an RIA or joining an existing one. They are just learning about the economics of the switch, and are not yet comfortable explaining this drastic move to their clients. Below are some starting points for having this conversation with clients:

1. As your advisor, I have been moving toward an advisory business for years, but have been constrained by the environment we are in. The changes in the marketplace have made us think hard about which platform would be the best to leverage.

2. As an RIA and a buy-side client of a custodian, we will not be under any pressure to sell proprietary products nor will we be constrained by a finite set of money managers and products in the way that we are at our current firm. We will have access to a greater universe of products, which will make it easier for us to find the products and solutions that could be more relevant to you.

3. As an RIA, we can choose which custodian we use in order to ensure that there is no disruption in service to your account. Further, we will have access to a wide open universe of best-in-class products and services with no conflicts to navigate.

4. We believe that, over time, this will be a lower cost solution to you than if we continue to operate in a brokerage environment. We will be able to pass reductions in transaction costs on to you.

5. We, as your advisors, will remain a constant for you. We will be custodying assets at a financially stable institutional financial services firm with a very healthy balance sheet. So, there will be no risk to you, our client.

6. And, finally, as an RIA advisor, we will be held to a fiduciary standard when offering you advice and selecting investments for you. This means your interests always come first, a higher standard than the suitability standard we are currently held to under industry regulations.

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