RIA, operate under BD or setup own?
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Anyone out there that can give me a quick list of pros/cons of operating under your BD’s RIA vs setting up your own.
[quote=gad12]Anyone out there that can give me a quick list of pros/cons of operating under your BD's RIA vs setting up your own. [/quote]
If you have to ask, you're not ready to set up your own.
A few things -
A BD RIA generally doesn’t permit the aggregate management of
discretionary investment portfolios. The loss of the 10 to 25% in revenue
back to the BD is significant, over time, and it’s not worth it for larger
groups. The fact that you are tied to a single investment platform is a
drawback, since you do not have the ability to manage assets regardless
of the platform. Your own RIA will permit you to manage funds at
Schwab, Merrill, Fidelity, or anywhere where the client wants.
You own it - you create the platform, you control the look, feel, and the
branding of your own RIA. Being dually registered on a BD platform also
requires you to fulfil the requirements of BOTH NASD and SEC
compliance. This can be a bit daunting, since you are trying to run a fee-
only practice through a BD. Also, your BD may impose restrictions on the
type of advice you provide, the types of fees you can charge, and the
types of platforms you must use for servicing your clients. There are
some BD’s that will also require first rights of refusal in the event of sale,
and they may restrict who buys your practice to other individuals within
On managed account business, they take a major portion of your
revenues… I couldn’t make it work for me.
I think the two largest reasons why I wouldn’t use a BD RIA affiliation is 1.)
the mass management of discretionary portfolios, and 2.) the
Just my opinion - I’ve always felt that the pure RIA format is the best
option for those looking for the ultimate in terms of flexibility. It’s not
for everyone, but I’m very happy with my decision to do the RIA. We
looked at many BD/RIA combinations, and settled to do it all through the
RIA which we created, and own.
Good luck to you.