Financial Advisors that contemplate starting or joining an Independent Registered Investment Advisory firm don’t typically make that decision suddenly.
The catalyst for the initial exploration may be due to an isolated incident such as a disagreement with a branch manager; It may be because of a restrictive business practice that was recently instituted by Compliance; Or, perhaps it’s a result of something more systemic like the inherent conflicts of an investment bank and wealth management business coexisting under one roof. The motivators are limitless. Ultimately, though, the final decision to transition into the RIA world has much more to do with one’s culmination of experiences, conviction and goals.
Here are commonly cited reasons for Going RIA:
Philosophical & Business Alignment
An RIA is a Fiduciary, required to always act in the best interest of the client, not simply do what’s suitable. This legal obligation is also a foundational tenet for many financial advisors. Going RIA can facilitate harmony among business model, philosophy, values and client interests.
Control, Autonomy & Flexibility
The RIA model empowers financial advisors to define and enhance nearly every aspect of the business. Whether strategic or tactical in nature, decisions such as service experience, how many in-person meetings, investment philosophy, technology, pricing, personnel, etc., can all be within their domain.
Many financial advisors yearn to deliver a transparent and objective offering centered around the client’s needs, goals and expectations free of product, vendor or internal conflict.
The potential in the RIA world to maximize business revenue and profitability while creating or joining an entity that is building enterprise value is compelling. Moreover, the option to monetize this asset at market rates can offer even greater financial benefits. The power to price client products and services is also attractive.
The ability to create or select a brand that embodies the essence of an Advisor’s values, standards and client commitments can be paramount.
The opportunity to create an entity that can fulfill personal and professional aspirations, deliver meaningful results, be a utility or platform for effecting change and/or become one’s legacy can be infectious.