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Starting an RIA vs. joining an RIA as an IAR

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Jan 18, 2011 2:35 am


Am a wirehouse FA with approx $18Mil in AUM. Have decided to leave for the RIA world. Realistically, about $13Mil should move with me.

I'm being advised by other/bigger RIA firms (looking to recruit me as an independent) it is foolish to set up an RIA with that asset level, but instead to join them as a rep, and avoid the compliance headaches. They claim I can do business as DBA (Doing Business As... my entity name) and enjoy all the independence.

Can anyone who has successfully started an RIA with these asset levels share their insight? Can it be done with these asset levels.

thank you in advance.

Jan 18, 2011 7:42 pm

I don't know if it is foolish. It's mostly a matter of economics.

Although it is possible to limit your overhead as an independent to under $50k per year you will limit your potential growth. You will have no assistant and an executive office environment. Sub-optimal for growth.

It will take more like $100k/year to establish an office with a dedicated assistant, 1,000 s/f of space and some marketing budget which will allow you to grow.

Or you could hook up with an existing RIA and grow your practice to $25 million in assets where the economics work better for you to be a stand-alone practice.