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Being An RIA Is All About Choice

Independence affords advisors the flexibility to break out on their own and still work with a broker/dealer on commissionable business.

As the wealth management industry evolves, many successful financial advisors leave the banks, wirehouses, regionals and traditional broker/dealers to pursue the registered investment advisor designation. While there are myriad reasons for making such a career-defining move to true independence through an RIA, most advisors will list the control and flexibility to do what’s best for their clients at the top. 

The rush to attain independence can come at the expense of what’s in the client’s best interest. RIAs need to ensure they have the control and flexibility to take advantage of the full spectrum of investment options, even if that’s a product with a commission. 

Going RIA Is More Popular Than Ever

According to Cerulli’s latest report, the RIA channel now controls 26.9% of the industry’s total advisor headcount and is projected to increase to 30.2% by year-end 2027.

Leaving a captive situation like a wirehouse or even a large IBD that is beginning to look like one to start an RIA is a logical next step for an entrepreneurial-minded advisor with a certain level of success. These advisors want to decide for themselves how best to run their practices and serve their clients.

Advisors have fully realized how much freedom they gain when liberated from a large institution. It’s also become clear to many that all the overhead costs they had been paying out of their compensation were irrelevant or unnecessary, and that the client connection, loyalty and relationship were always with the advisor, not the enterprise.  

The benefits of striking out as an RIA start with the potential financial rewards. You are building a business for yourself that can grow in value based on your hard work and result in significant equity you can monetize in an eventual liquidity event. You choose the clients you want to work with and help them achieve better outcomes without the pressure to sell home-team products.

Today’s clients have changed. They expect more from their professional relationships, including those with their financial advisors. They want a high-touch, personalized service experience from a fiduciary focused on always doing what's best for them. They want a well-thought-out, complete financial plan, not a limited number of products, sub-standard services and prepackaged communications. These clients are younger, more diverse and increasingly female, and care less about brand names than their parents. In fact, a prominent national brand can be a turnoff, as it seems cold and impersonal.  

Most advisors value client relationships highly, and the RIA model helps them deliver on that promise. But is there a cost?

Maintaining Your Commissionable Business

Establishing a standalone RIA with your own Form ADV is the height of independence, where you run your business as you see fituse third-party service providers you choose and call all the shots, subject to SEC or state oversight. Joining a firm’s corporate RIA is an option for many who want independence but prefer to offload the compliance, operational and other back-office tasks to someone else. 

If you are considering starting an independent RIA because of the flexibility and control the model offers, that should extend to your ability to provide your clients with a truly comprehensive wealth management experience, including brokerage services. 

Going fee-only with an RIA shouldn’t mean you have to give up your existing commissionable business or not offer these services in the future as appropriate. You may have clients with existing variable annuities or future clients who could benefit from opening one. You may also have clients with large company stock positions you want to diversify over time. These are clients you value, want to maintain relationships with and support to the best of your ability. 

One way to accomplish this is to work with an RIA-friendly broker/dealer to execute this business and receive commissions and trails based on their payout grid. These limited-service broker/dealers are designed for this type of business. 

Using this approach, you would separate your fee-based and commissionable businesses. All of your fee-based activity would be done through your RIA. Meanwhile, you would keep your Series 7 and do commissionable transactions through the broker/dealer.

The benefits of true independence don’t mean sacrificing the ability to conduct commissionable business. It’s an RIA’s responsibility to do what is in their clients’ best interest, and sometimes, that requires a relationship with a broker/dealer.  


Michael Nessim, CEO and Managing Partner of Kingswood Wealth Advisors, an SEC-registered RIA and a FINRA-licensed broker/dealer 

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