An irreverent Wall Street Blog
GUEST BLOG: Transitioning to Independence by Michael King of Michael King Associates
July 16, 2021
Transitioning to
Independence
What Type of Independence is Right for
You? If you're considering leaving the wirehouse world to go
independent, you may be wondering what type of business model is best suited to
meet your needs and help you achieve your professional goals. The type of
independence you choose depends on several factors, including the level of
external resources/support you require and how much control you hope to
maintain over the daily operations of your firm. Below is a summary of the most popuar options
for achieving
independence.
Option 1 - Independent broker-dealerSome advisors seeking independence move to an independent broker-dealer (IBD) platform, which allows them to continue with both fee-based and commission-based business. IBD platforms are offered by both national, well-known firms as well as smaller firms that may provide more personalized service. The most well-known IBDs are LPL, Ameriprise, Wells Fargo and Raymond James. For larger producers who need additional support, firms such as Dynasty Financial Partners, Focus Financial and Hightower Advisors provide an added level of service for everything you will need to accomplish as an independent advisor. They provide support for all back-office and compliance functions so you can truly focus on building and maintaining client relationships, with few distractions. Although there may be an additional fee for these specialized services, it is often well worth the added expense in order to increase your business. If choose to go this route, you will need to maintain your FINRA registrations. Payouts are typically between 85% to 90%, and you will be responsible for paying all firm expenses.Option 2 - Independent RIA If your business is primarily fee based, it might make sense to establish your own independent RIA without the support of a broker-dealer. Doing so allows you to reduce your fees and have the flexibility of using more than one custodian. Independent RIAs are regulated by the SEC, rather that FINRA. They typically employ an in-house compliance professional to help streamline processes and oversee compliance reviews.Option 3 - Hybrid advisor As the name suggests, a hybrid advisor (or dually registered RIA) is a mix between Options 1 and 2. Under this business model, the advisor is registered as both a Registered Investment Advisor (RIA) and a broker/dealer. Because of their dual registration, hybrid RIAs are eligible to receive both fee-based and commission-based compensation. Hybrid advisors are typically responsible for their own
client reporting and billing, and they often pay the broker-dealer to handle
compliance oversight. Regardless of whether you choose to operate as an independent
broker-dealer, an RIA or a hybrid advisor, there are financial incentives
associated with independence. Before you make any move, however, it's important
to speak with a qualified professional who can help maximize your deal.
NEVER accept an offer until you speak with us. We're here to
help! We work with you to evaluate all of your options and decide on a course
of action that meets your needs, as well as the needs of your clients.
If you're interested in learning more about how
we can help with your move toward independence, I'd love to have a
conversation. Please email me at michael@michaelking.com,
call the office at 212-687-5490 or call or text me at 917-747-4805. At Michael
King Associates, we specialize in helping advisors find their ideal place and
achieve their best career path. We are your go-to "MATCHMAKERS!"
Option 1 - Independent broker-dealerSome advisors seeking independence move to an independent broker-dealer (IBD) platform, which allows them to continue with both fee-based and commission-based business. IBD platforms are offered by both national, well-known firms as well as smaller firms that may provide more personalized service. The most well-known IBDs are LPL, Ameriprise, Wells Fargo and Raymond James. For larger producers who need additional support, firms such as Dynasty Financial Partners, Focus Financial and Hightower Advisors provide an added level of service for everything you will need to accomplish as an independent advisor. They provide support for all back-office and compliance functions so you can truly focus on building and maintaining client relationships, with few distractions. Although there may be an additional fee for these specialized services, it is often well worth the added expense in order to increase your business. If choose to go this route, you will need to maintain your FINRA registrations. Payouts are typically between 85% to 90%, and you will be responsible for paying all firm expenses.Option 2 - Independent RIA If your business is primarily fee based, it might make sense to establish your own independent RIA without the support of a broker-dealer. Doing so allows you to reduce your fees and have the flexibility of using more than one custodian. Independent RIAs are regulated by the SEC, rather that FINRA. They typically employ an in-house compliance professional to help streamline processes and oversee compliance reviews.Option 3 - Hybrid advisor As the name suggests, a hybrid advisor (or dually registered RIA) is a mix between Options 1 and 2. Under this business model, the advisor is registered as both a Registered Investment Advisor (RIA) and a broker/dealer. Because of their dual registration, hybrid RIAs are eligible to receive both fee-based and commission-based compensation.
ABOUT MICHAEL
KING
President
Michael King Associates,
Inc.
1120 Avenue of the Americas, 4th
Fl.
New York, NY 10036
Telephone:
212-687-5490
800-367-3157
Cellphone:
917-747-4805
Email: michael@michaelking.com
Website: michaelking.com
Michael King, President has 40
years recruiting experience. We have placed thousands of FA's and are happy to
give references from the FA's that we have placed if you would
like.
We consider ourselves to be
"Matchmakers" matching advisors with the best firms and provide very personalized
service. We can provide all the choices available wirehouses,
independents and RIA's. COME TO THE
SOURCE!
Michael has been interviewed by
FundFire, Advisor Hub, On Wall Street, The New York Times, The Wall Street
Journal and other media publications.