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Mar 19, 2012 9:26 pm

I am relatively new to securities and only have about 400k in AUM right now.  I plan on adding to that of course. However, I am concerned that the B/D RIA that "hired / sponsored" me is just not a good fit.

My background is in insurance and am the principle of a brokerage firm that works with company plans / insurance. About 95% of the revenue is from company plans / insurance.  The kind of work I do lends nicely to 401k /403b plan administration / maintanence.  That is why I got into securities.

The B/D RIA that sponsored me does not do any ERISA business on their platform (i.e they only do ERISA exempt plans).  If I want to work with ERISA plans,  I have to find a wholesaler and use their platform.  I am also not allowed to see clients in my office, but instead, must drive 1 hour to the B/D's regional office or meet clients in their home / place of business.  They say that the compliance would be too costly to allow me to see clients in my office.  They also say that a registered rep of the B/D must be at the office (i.e. my office) during trading hours.  I am the only registered rep in the office, so therefore, I can't meet clients in my own office since I may not be there every day between 9-5.  The payout rate is also about 40%... they keep 60%.  Which seems like a bad payout rate.  From what I've seen, there is little one to one training.  I am usually referred to call a wholesaler for info / training.  I've been training myself via books, magazines, and websites like this one.  The monthly "trainings" are mostly having a wholesaler pitch product to you.  The compliance consists of "you do it this way".  I suppose they do execute trades / provide custodian services for me.  Does that warrent a 40/60 split?  Is this the norm for a B/D?

That said, what should a BD/ RIA provide?  What is reasonable to expect?  What should the average yearly costs that the B/D or RIA charges me (not much AUM) be?  

Also, after reading a few posts about "registering as an indie RIA", I got an idea.  Could I join a small RIA to avoid these B/D issues?  I think 2 guys I know are RIA's as they advertise under "XYZ wealth planners" but run their business thru Princor / Principle.  I especially don't like the fact I can't meet clients in my own office. 

I have a book of business that is non-securities, it's a good book, I want to expand into securities.  It sounds like a lot of B/D's want you to sell sell sell and meet production requirements.  Is it hard to transfer clients if I do want to change RIA's or  B/D's in the future?  This current B/D isn't bad, I'm just concerned it's not a good long term fit and a better fit will be available in a few years (or sooner) as my AUM grows.  I do not want to be "stuck" and have to leave my clients behind.  Ideally, I want to be able to advertise under "XYZ Financial Advisors" and not as "Employee of ABC Broker Dealer".  But I don't want the costs to be prohibitive.

Mar 21, 2012 10:43 pm


I run a RIA and spend majority of my time and generate majority of my revenue from ERISA plans.  If you would like some input or see if my platform would fit your needs send me your contact details via pm.

Apr 16, 2012 5:17 am

Well, what exactly are they providing you?

Did they sponsor you for licenses?  Are they paying for your compliance? your office expenses? Salary?

Apr 16, 2012 12:52 pm


Well, what exactly are they providing you?

Did they sponsor you for licenses?  Are they paying for your compliance? your office expenses? Salary?


Yes, they sponsored the licenses.  No for everything else.  You pay for all expenses and the split is 60/40, they keep 60%.  They only provide a non-ERISA platform, i.e. IRA's.  Anything else, you have to do the legwork.  And they are very slow with paperwork, so If you want to install a "XYZ company" 401k platform, it'll take several months for them to get the paperwork done so you can install it.... and they might just say  "No, get IRA accounts."  That is bad because I work in the 401k / company plan area.  They knew this when they sponsored me.