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RIA (Series 66) vs. Broker/Dealer (Series 7)

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Jan 26, 2012 10:25 pm

Hello All, 

I am awaiting approval to establish my IARD account so that I can complete the ADV form.  Once completed I intend to establish my current LLC (in New Jersey) as an RIA.  I have been in the industry for almost 15 years as both a Financial Advisor and Wealth Advisor at a private bank (s).  I have worked in Silicon Valley and Manhattan more recently and have also traded equities and futures for a few years..  I have a series 7, 66, 4 and NJ/NY Life & Health Insurance license.

From the research I have done, all I need to establish an RIA and go the independent route is a Series 66.  While if I want to maintain my Series 4, 7 I would need to partner up with a broker/dealer, and lose my independence.

I am looking for advice on the most beneficial path to choose.  My immediate assumption is that I do not want to let any of my licenses expire as it would make me less marketable.  However, I would most likely want to establish a fee based business based on assets under managment and not concern myself with commissions.  

QUESTION 1 -  If i let my Series 7 expire and only utilize my Series 66, do I exclude my clients from keeping individual equities in my RIA or just limit my ability to provide advice on the individual equity and receive commission ?

QUESTION 2 -  in your opinion what do you value more:  1.  Your independence and, I assume, higher payouts "and expenses" or 2. Partnering with a B/D for a lower payout and "lower expenses" but maintaining all licenses ?

If anyone can provide any insight or assist me with my logic I would greatly appreciate.

Best Regards,

Jan 28, 2012 3:29 pm

Im not sure you would really "lose your independence" if you partnered with a B/D.  I think there are some channels out there that will execute broker trades for you and sponsor you while not really being "overbearing".  You might be subject to their grid on the executions, but thats not really lose of "independence" IMO.

I could be wrong on that, but talking to the few RIAs I know, that is the impression I get.