I have been with FINET for some time. Overall I have been happy with the company. Everything that they told me upfront has been very true. Their service and payout is very good. The fee based products are top notch. However, with recent events I am considering leaving and going RIA. I am tired of defending a company that I do not even work for. I understand that First Clearing (Wachovias clearing firm)has an RIA channel. Any experience with them?? What about leaving an independent B/D and going RIA??? I already have the infrustructure in place, i.e. computers, incorporated, furniture, office space etc… What is the main differences between RIA and independent B/D???
I am about 90% fee based. I use all outside money managers. Can this still be done with an RIA or do I have to do all my own management?? How do you bill clients for fees? Can the custodian bill the clients accounts? What about IRA’s how do you bill those accounts??
Uglyfinet, I’ll respond to your essentially duplicate posts here as it seems to be more of an RIA issue.
For someone in your situation, with 90% fees already at an indy b/d with the infrastructure in place,
a move to RIA should be very simple really. I’d agree with AGE2RIA
(who responded so well to your other post) that your first steps are to call Schwab and Fidelity to express
interest and begin having personal discussions. They will answer many
of the questions for you and at the appropriate time give you specific
proposals for pricing on your specific book. There are other decent
custodians you could consider as well if you wish, but those are the
biggest two and are both good. You’ll find you will likely have to switch some systems, but the platforms & systems at both are very robust and you can choose what you want/need on an a la carte basis. If you haven’t already done so, by all means go to their web sites for prospective RIAs. There is a ton of information there on the process including podcasts and worksheets and white papers. And all free.
Second, you need to immediately begin interviewing who you will use for legal
counsel and compliance, as they will guide you through the nitty gritty
of registration, formation of the legal entity, as well as any
employment/exit issues at your current b/d. Again, there are many
options here, but be sure to look at firms who specialize in this
industry, regardless of their location. I found local law firms anxious
to get my business but not very experienced and yet more expensive than
national firms who specialize in this niche. AGE2RIA mentioned RIA
Compliance Consultants, and I can recommend MarketCounsel &
Hamburger Law Firm (NJ) also.
I do not have first hand experience with First Clearing, but generally
speaking if you want true independence I would recommend Schwab,
Fidelity or similar. Those other platforms tend to appeal more to those who either or
more commission based still or those who want more of a turnkey package
and don’t care that much for ultimate flexibility. This gets more
technical and I don’t have the time just now to go into it, but one of
the issues is being an IAR under a “corporate RIA” (someone else’s RIA)
as opposed to it being your RIA.
So there you have it - first steps are to talk with custodians and
legal counsel. There will be many other steps and details along the way, but these two will be critical first steps. Come back with other questions as they arise. I’m sure between AGE2RIA,
Captain and myself - as well as any other RIAs lurking out there, we
can be of some help.
RIA isn’t for everyone, but it’s fantastic for those it fits. Sounds like you may be one of them.
Thank you for that information. My thinking on first clearing is it might be an easier transition for my clients (paper work wise). I might also get a little more help from the FINET guys if they new i was sticking with their clearing firm. I will contact Chuck and Fidelilty today. After contacting them I will post with any follow up questions.Good info thanks alot..
[[email protected]]I am about 90% fee based. I use all outside money managers. Can this still be done with an RIA or do I have to do all my own management?? How do you bill clients for fees? Can the custodian bill the clients accounts? What about IRA’s how do you bill those accounts??[/quote]
To briefly answer your questions:
1. Using outside money managers can be very easily done in an RIA.
2. Billing can be done any number of ways, but is usually simply automatically deducted from each client account, via the custodian. You simply upload a spreadsheet to the custodian with account numbers and amounts for each account to be deducted, and within a day the custodian processes the deductions and the money is transferred into your account at the custodian.
3. You can have the fee for any account - an IRA or whatever - deducted from another account if the client wishes.
Thank you for that information. My thinking on first clearing is it might be an easier transition for my clients (paper work wise). I might also get a little more help from the FINET guys if they new i was sticking with their clearing firm. I will contact Chuck and Fidelilty today. After contacting them I will post with any follow up questions.Good info thanks alot..[/quote]
Sticking with First Clearing may (I'm not sure) be easier in the short run, both for you and your staff (who would be familiar with the systems/platform) and your clients (who may not need to sign as much paperwork). But in exchange you certainly give up quite a bit of flexibility and, I would guess, functionality for years to come.
Your call there, but as the saying goes, it's not the purchase price that kills you, it's the maintenance!
Morph,You have to do your billing manually? Do any of the major custodians allow you to setup an automatic billing schedule/fee structure?[/quote]
It's not quite as manual as it sounds, ice. Once the fee rates are entered into the system the calculations are done automatically. However, for compliance reasons you need to manually review and "accept" those so the custodian is acting on your explicit instructions, as the custodian will not take responsibility/liability for that calculation. But once set up it's close to automatic.
Thank you for that information. My thinking on first clearing is it might be an easier transition for my clients (paper work wise). I might also get a little more help from the FINET guys if they new i was sticking with their clearing firm. I will contact Chuck and Fidelilty today. After contacting them I will post with any follow up questions.Good info thanks alot..[/quote] Ugly: What was your ultimate decision? We too are Finet considering First Clearing and going full RIA. On the surface it appears to be pretty seemless to the clients and they have all the platforms we use. Just curious what you discovered if you are still out there. Thanks.
I do have experience with First Clearing.
- They only with BDs. So unless you are thinking of opening a independent BD I would not consider them.
- They also have nothing in common with Wochovia. Apparently the bank and First Clearing never integrated systems to offer integrated products. Forget about getting your clients ATM or credit card to work with First Clearing.
- As a clearing BD they are good, not any better or worse than the rest.
I think one of the replies suggested you try Schwab and Fidelity. There is also Pershing and TD. I am surprised every day with the TD systems. But the key here is not which custodians you use, but how do you create a system similar to Finet. Not to market myself but I have helped many advisors setup their shop included finding products. Although with Finet you should have most of it setup. The products can be tricky as most advisors will simply use the products that the custodian offers. Big mistake!! Many are marked up and you can probably do better by going direct. For instance there are many managed accounts platform providers. Depending on assets, you can negotiate with the vendors. In this environment, you should be negotiatiing with all your vendors. Once again if you need help in this area send me an email and we can discuss.
www.FAfreedom.com - Breakaway Expets.