Independent broker/dealer Triad Advisors is launching a new corporate registered investment advisory entity that will give commission- and fee-based advisors the ability to use multiple custodians, including Schwab, Fidelity and National Financial Services.
Known for being the “RIA-friendly firm,” Georgia-based Triad is hoping to make its corporate RIA structure more attractive to mid-market RIAs looking to retain their own brand, but who may be struggling with compliance burdens.
“We asked ourselves ‘How can we be even more hybrid friendly?’ And this was the obvious solution,” said Michael Bryan, senior vice president of advisory services for Triad and CEO of Triad Hybrid Solutions, the new corporate RIA. “In fact, some advisors coming over to Triad Hybrid Solutions may find that it’s the first step they take in eventually establishing their own RIA.”
The real differentiator for advisors under Triad’s new structure is the option to affiliate with multiple custodians. Previously, Triad advisors operating under the firm’s old corporate RIA could only custody with NFS. The firm is also in the process of adding additional top custodians to the platform by the end of the year, according to Bryan.
“In the past, many broker/dealers would only allow advisors to have their own RIA and custody at their platform, if they allowed advisors to have their own RIA at all,” Bryan said.
About 64 percent of independent b/d advisors who are also registered RIAs only work with a single custodian, according to WealthManagement.com’s 2014 Advisor Benchmarking Survey. Only about 18 percent work with two custodians, while less than 10 percent of advisors work with more than three custodians. Forty-three percent of advisors working at an independent broker/dealer are registered investment advisors working in the hybrid space, the survey found.
“What we’re looking to accomplish with Triad Hybrid Solutions is meet a very specific need that we’re finding in the marketplace, which is mid-sized RIA entities that are challenged with keeping up with the regulatory changes, with the multiple regulators that they may be dealing with, specifically multi-state registrations, and increased complexity and cost of technology solutions,” Bryan said.
Triad Hybrid Solutions will also offer technology tools such as Black Diamond portfolio management and Salesforce CRM systems.
One difference between Triad’s platform and others out there is its target advisor, Bryan said.
“We’re targeting a different market; we’re targeting that mid-asset ranged RIA that we feel like has been underserved…versus some of the larger firms that are really going after the billion-dollar RIA firms and, in some cases, looking to buy a piece of their book.”
Triad is not looking to own any part of the advisors’ business, he said.
The discussion to launch an offering like Triad Hybrid Solutions started after the Securities Exchange Commission turned over the regulation of small and mid-sized RIAs over to the state securities regulators in 2010. “I think that is probably the light bulb for a lot of firms that found themselves in a regulatory environment that became extraordinarily cumbersome and potentially disjointed,” Bryan said.
The firm has no plans to move advisors currently housed under Triad’s old corporate RIA over to the new Triad Hybrid Solutions platform. About three out of four Triad advisors are operating their own RIA, but an increasing number of advisors are electing to join its corporate RIA.