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RIAs helping RIAs

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Jan 4, 2008 9:25 pm

Noticed a couple big time RIAs helping newbie RIAs get started by “plugging them in” to their back office for a fee- that way the new guys dont have to run a small biz, just plug and play.

Some are even going as far to help with finding an office, furniture, etc.

The very basic offering (back office sharing) seems like another barrier down for reps wanting to go the RIA route


Jan 6, 2008 2:50 am

For smaller firms (less than $30 million AUM), it might be the right solution. For anyone with greater than $100 million, I don’t see the benefit. Yes, it allows for a ‘plug and play’ environment for new members of the RIA, and for some people that can certainly be a good thing.

The reason we established our RIA had everything to do with control. We wanted to control our process, compliance environment, technology and everything to do with our business. It’s total freedom for us. If others feel the need to cuddle up with an established RIA, that’s fine. I think, however, for the override that the existing RIA would charge, it could be worth it for some people. I think, though, it would be an expensive proposition for anyone who is willing to work a little harder for the extra money. Owning your own RIA isn’t easy. But, it truly has advantages when you are able to craft and execute the creation of your own firm the way you want it to be.

An ideal RIA environment is one where the individuals can split tasks, collaborate, and build a business that exists as one entity. I see a business that ‘collects’ small RIA advisors as one which is segmented and diminished in terms of value from the ownership perspective.

I created my firm to execute on one manageable strategy. Bring together a bunch of people who are affiliating only to make it cost and time effective, and I’m sure it will work fine. Will it be the best decision for those looking to maximize the value of their own practice? No. It gets your foot in the establishment without having to front all the work. For some people this is a good idea. I think, however, people like that are best served through RIAs such as Raymond James and AIG.

IMHO, it’s a good idea for some… but, not for most.

Establishing and operating your own RIA is a rewarding experience. In my opinion, people who see joining another RIA as the right solution most likely aren’t willing to devote the time needed to have a thriving practice. They are looking for the quick answer to the RIA market…

For me, I wouldn’t have changed a thing. Building my firm was similar to a right of passage that I think people should experience. You’ll bite your nails, watch the $$'s leave your wallet, and in the process, understand the nuts and bolts of your firm unlike the person who sidled up with the RIA down the street who was willing to open their door. It’s a priceless process.

Good times.