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Mar 26, 2009 1:30 am

I think I’m figuring this stuff out.  Do you all use a minimum for stocks?  Can I offer stock trades and just charge like 1-2% for AUM and give them like 200 trades.  As an RIA how do you execute the stock trades?  I thought you had a to be a B/D?  Can I do it as an RIA since I have a 7 but only charges an advisory fee?

Mar 26, 2009 1:46 am

You can do as many trades as you want. The clients will pay a small commission ($13 or so) per trade - this compensates your custodian, and you charge the asset management fee of 1% annually. Your custodian, depending on the one you choose, takes absolutely NOTHING from your RIA revenue. So, you start with a 100% payout on your advisory fees. The clients pay the small ticket charges to the custodian for every trade.   Your trading frequency and the size of your practice will determine the ultimate commission costs to your client.

As for executing the trades, you can do it like you’ve always been able… just tap it into the system. Your custodian will execute the trades, no differently than you would while employed through your BD. It’s absolutely no different. You do NOT have to be a BD to have your custodian execute your equity trade order.

Also, if you are an RIA, you do not need your 7 in order to execute stock trades for your client. You will need to pass the 65.


Mar 26, 2009 2:01 am

Did I read that correctly, you charge a commission and a fee on the account?

Mar 26, 2009 2:13 am

Jesus, why be a broker / dealer!  So do they write two checks or how does that work?  What are the mechanics of gettin PAID!

Mar 26, 2009 2:16 am

What would you recommend for existing clients in A or C share mutual funds.  What about variable annuities?

Mar 26, 2009 2:32 am

sell the funds, use jefferson national for the va’s.

  fees are paid via direct debit from the client account per your advisory agreement.   your accounts will mostly be discretionary, so you'll want to do model based trading, all major custodians have this.  makes it easy to be watching all accounts and keeps your ass out of the fire from a regulation standpoint.   you don't get commissions.  the client will pay wholesale (usually) for the ticket charge on equities and that goes direct to the custodian.   you can just hire out all management to a third party and not have to worry about anything.  trading, billing, reporting are all done for you and your job is to raise money and cash checks.   ria's are way cooler and better looking than 7 licensed brokers and insurance agents.   good luck.
Mar 26, 2009 3:09 am


you don’t get commissions. the client will pay wholesale (usually) for the ticket charge on equities and that goes direct to the custodian.[/quote]

Clients don’t pay wholesale. That’s one of the benefits of having your practice situate all assets through a custodian - you get the bargaining power. It’s quite a bit more leverage than the normal $500k client would have with any custodian concerning their pricing.

Yes… clients do not write two checks. The commission costs are added to the purchase price and elevates the basis. They only pay you the advisory fee, either through a direct debit to their account, or by writing you a check.

Mar 26, 2009 3:26 am

Great stuff and since RIAs are better looking than series 7 brokers than I should be an RIA.  LOL.

  All this stuff sounds great but I'd love help in setting it up so I don't have to reinvent the wheel.   Thanks Again
Mar 26, 2009 8:31 pm

You’re probably right Ice.  I will do more research.  As an advisor can you cold call with a stock?  I’m assuming no and you could only cold call with advisory services but let me know.