How Financial Advisors Can Find the Right RIA or Broker-Dealer That Aligns With Their Values
As a financial advisor looking to grow your practice, one of the most important decisions you'll make is choosing the right registered investment advisor (RIA) firm or broker-dealer to partner with. The RIA or broker-dealer you select will have a major impact on the products and services you can offer clients, the technology and support you have access to, your ability to scale your business, and ultimately your career satisfaction and success.
But beyond the standard capabilities, payouts and fees to consider, it's critical to find a firm whose mission, values and culture align with your own. Working with a firm that shares your values and vision for serving clients will empower you to build the practice you've always envisioned.
So how do you go about finding an RIA or broker-dealer that's the right match for you? Here are some key factors to evaluate:
Understand the Different Affiliation Models
Before diving into your search, it's important to understand the different affiliation and service models that RIAs and broker-dealers offer. Each has pros and cons to weigh based on your goals and preferences:
- Independent RIAs provide the most flexibility and control, allowing you to build your own brand, choose your tech stack, and keep 100% of your revenue. But you're also responsible for handling compliance, operations, HR and more on your own9. RIAs are held to a fiduciary standard and cannot earn commissions12.
- Independent broker-dealers (IBDs) give you the freedom to run your own practice with your branding, but provide varying levels of support with compliance, technology, product access, and operations. You share a percentage of revenue with the IBD. Advisors can be fee-only or earn commissions and have more flexibility in product recommendations under a suitability standard129.
- Corporate RIAs and name-brand firms like Edward Jones or Merrill Lynch provide turnkey office space, staff support, technology and branding. But you give up a lot of control and a bigger portion of your revenue, often 40-60%9.
- Hybrid RIA/broker-dealer arrangements allow you to maintain both an RIA and broker-dealer affiliation. This gives you the ability to offer both fee-based advisory services and commission products to meet different client needs2.
- Advisor networks and platforms like Dynasty, XY Planning Network, and Sanctuary Wealth provide outsourced middle- and back-office support to RIAs and breakaway advisors. Costs range from 5-40% of revenue depending on service level9.
Consider which model offers the right balance of independence and support for your needs. Solo practices may value more assistance, while ensemble firms may prioritize flexibility.
Assess the Firm's Service Model and Capabilities
Look closely at what services and capabilities each prospective firm offers to ensure they can support your business needs and growth plans. Key areas to evaluate include:
- Technology - What financial planning, CRM, portfolio management, and other software does the firm provide? How integrated and user-friendly is their tech stack?13
- Investment solutions - Does the firm offer a robust range of investment products and model portfolios to serve your clients' needs? What research and due diligence do they perform?
- Marketing and growth support - How does the firm support advisors in marketing and growing their practices? Do they provide website development, content marketing, social media support, etc?1113
- Compliance and operations - What compliance oversight and support does the firm provide? How much of the operational burden do they handle vs. you?13
- Practice management and training - Does the firm offer coaching, peer networking groups, and training to help you optimize and scale your practice?13
- Succession planning - As you build enterprise value in your practice, can the firm support your long-term succession and continuity plans?12
Assess how each firm's service model aligns with your current needs and future vision. Prioritize the capabilities that matter most to your value proposition and growth strategy.
Evaluate Cultural Fit
Finding a firm that shares your values and client service philosophy is equally important. When your principles are aligned, you'll feel empowered and energized to do your best work.
As you research and meet with potential firms, look for cultural signs like:
- Mission and values - Does the firm have a clearly articulated mission and values? Do they align with your own purpose and beliefs? Are they evident in how the firm operates?19
- Leadership and vision - Is the firm led by experienced, respected professionals who demonstrate integrity? Do they have a clear vision for the future?
- Advisor support and service - Does the firm have a sincere commitment to helping advisors succeed? Are they responsive and focused on continuously improving the advisor experience?13
- Community and collaboration - Is there a strong sense of community among advisors? Are there opportunities to collaborate with and learn from other successful advisors?11
- Diversity and inclusion - Does the firm foster a diverse and inclusive culture? Do its advisors reflect the communities and clients it serves?
- Reputation and recognition - Is the firm well-respected in the industry? Has it been recognized for its culture, service, technology or other areas?18
Pay attention to how you feel interacting with each firm's leadership and advisors. Make sure their values and vision resonate with you personally and professionally.
Understand the Economics
Of course, the economics of each arrangement matter too. Carefully review each firm's compensation structure, fees, and account minimums to ensure they support your goals and clients' best interests.
On the revenue side, ask questions like:
- What percentage payout do advisors receive? How does this compare to industry benchmarks for my AUM level?12
- Does the payout vary by type of business (advisory vs. brokerage) or product? Are there any conflicts of interest?1
- Are there any minimum production requirements or quotas I need to meet?
- How are clients billed - in advance or arrears? What happens to revenue if a client leaves?
On the expense side, understand what costs and fees you'll be responsible for, such as:
- Affiliation/platform fees - Are there any upfront affiliation costs or ongoing platform fees?9
- Technology and software fees - What technology is included vs. an additional cost?
- E&O insurance - Is this provided by the firm or do I need to obtain my own?
- Marketing and growth costs - What marketing and lead generation support is included vs. my responsibility?
- Ticket charges - Are there any fees charged per trade or transaction?
Run the numbers to compare your potential take-home income and profit margins under each option. But don't make decisions on economics alone - the firm's capabilities and culture matter just as much for your long-term success.
Do Your Due Diligence
Once you've narrowed down your choices, it's time to dig deeper into each firm's background, stability and regulatory record. Some key steps:
- Review the firm's Form ADV (for RIAs) or Form BD (for BDs) to understand their ownership structure, AUM, disciplinary history, and other key info114.
- Check the firm's background and complaints history in FINRA's BrokerCheck system14.
- Analyze the firm's financial stability, growth trajectory and competitive positioning. Are they well-capitalized to invest in advisor support and technology?
- Ask to speak to current advisors about their experience with the firm. What works well and what could be improved?14
- Understand the firm's contingency plans and business continuity preparations. How would your practice and clients be protected if something happened to the firm?
- If you have a book of business, make sure the firm can support porting your clients and historical data onto their systems to ensure a smooth transition.
Don't rush this process. Take the time to thoroughly vet each firm and get your questions answered. Your long-term success depends on it.
Putting It All Together
Choosing the right RIA or broker-dealer to partner with is a momentous decision for any financial advisor. By taking the time to clarify your own values and goals, understand the different affiliation options, and evaluate each firm's capabilities, culture, and economics, you can find a firm that will position you and your clients for success.
Some key takeaways:
- Know your goals and value prop as an advisor. Let that guide your search and decisions.
- Understand the trade-offs of each affiliation model. Prioritize the balance of freedom and support you need.
- Assess each firm's full range of capabilities to ensure they can support your growth vision. Don't get enamored by a single factor.
- Make cultural fit a top priority. Working with a firm that shares your values will inspire your best work.
- Analyze the economics of each option and effects on your bottom line. But don't make decisions on money alone.
- Do thorough due diligence on each firm's background, stability and service record. Your reputation depends on it.
Choosing the right partner is the foundation for building a thriving, enduring practice. By following these principles, you can find a firm that will empower you to serve clients exceptionally well, grow with purpose, and love the work you do each day.
References
1 RIA vs. Broker-Dealer: What You Need to Know - SmartAsset
2 Broker-Dealers vs. RIAs: What's the Difference? - Investopedia
9 Assessing Payouts And Fees When Choosing An Advisor Affiliate Platform - Kitces.com
11 SEO Writing: The 10 Rules For Creating Optimized Content - Rock Content
12 What's the 'Real' Value of a Financial Advisor's Business? - Diamond Consultants
13 AdvisorNet Financial | Reputation. Relationships. Resources.
14 How to choose a financial advisor - CNN
18 How To Choose A Financial Advisor - Forbes
19 The Benefits of a Career as a Financial Advisor - Premier Jobs UK
Material prepared herein has been created for informational purposes only and should not be considered investment advice or a recommendation. Information was obtained from sources believed to be reliable but was not verified for accuracy. It is important to note that federal tax laws under the Internal Revenue Code (IRC) of the United States are subject to change, therefore it is the responsibility of taxpayers to verify their taxation obligations.
Savvy Wealth Inc. is a technology company. Savvy Advisors, Inc. is an SEC registered investment advisor. For purposes of this article, Savvy Wealth and Savvy Advisors together are referred to as “Savvy”. All advisory services are offered through Savvy Advisors, while technology is offered through Savvy Wealth. The views and opinions expressed herein are those of the speakers and authors and do not necessarily reflect the views or positions of Savvy Advisors.
How Financial Advisors Can Find the Right RIA or Broker-Dealer That Aligns With Their Values
As a financial advisor looking to grow your practice, one of the most important decisions you'll make is choosing the right registered investment advisor (RIA) firm or broker-dealer to partner with. The RIA or broker-dealer you select will have a major impact on the products and services you can offer clients, the technology and support you have access to, your ability to scale your business, and ultimately your career satisfaction and success.
But beyond the standard capabilities, payouts and fees to consider, it's critical to find a firm whose mission, values and culture align with your own. Working with a firm that shares your values and vision for serving clients will empower you to build the practice you've always envisioned.
So how do you go about finding an RIA or broker-dealer that's the right match for you? Here are some key factors to evaluate:
Understand the Different Affiliation Models
Before diving into your search, it's important to understand the different affiliation and service models that RIAs and broker-dealers offer. Each has pros and cons to weigh based on your goals and preferences:
- Independent RIAs provide the most flexibility and control, allowing you to build your own brand, choose your tech stack, and keep 100% of your revenue. But you're also responsible for handling compliance, operations, HR and more on your own9. RIAs are held to a fiduciary standard and cannot earn commissions12.
- Independent broker-dealers (IBDs) give you the freedom to run your own practice with your branding, but provide varying levels of support with compliance, technology, product access, and operations. You share a percentage of revenue with the IBD. Advisors can be fee-only or earn commissions and have more flexibility in product recommendations under a suitability standard129.
- Corporate RIAs and name-brand firms like Edward Jones or Merrill Lynch provide turnkey office space, staff support, technology and branding. But you give up a lot of control and a bigger portion of your revenue, often 40-60%9.
- Hybrid RIA/broker-dealer arrangements allow you to maintain both an RIA and broker-dealer affiliation. This gives you the ability to offer both fee-based advisory services and commission products to meet different client needs2.
- Advisor networks and platforms like Dynasty, XY Planning Network, and Sanctuary Wealth provide outsourced middle- and back-office support to RIAs and breakaway advisors. Costs range from 5-40% of revenue depending on service level9.
Consider which model offers the right balance of independence and support for your needs. Solo practices may value more assistance, while ensemble firms may prioritize flexibility.
Assess the Firm's Service Model and Capabilities
Look closely at what services and capabilities each prospective firm offers to ensure they can support your business needs and growth plans. Key areas to evaluate include:
- Technology - What financial planning, CRM, portfolio management, and other software does the firm provide? How integrated and user-friendly is their tech stack?13
- Investment solutions - Does the firm offer a robust range of investment products and model portfolios to serve your clients' needs? What research and due diligence do they perform?
- Marketing and growth support - How does the firm support advisors in marketing and growing their practices? Do they provide website development, content marketing, social media support, etc?1113
- Compliance and operations - What compliance oversight and support does the firm provide? How much of the operational burden do they handle vs. you?13
- Practice management and training - Does the firm offer coaching, peer networking groups, and training to help you optimize and scale your practice?13
- Succession planning - As you build enterprise value in your practice, can the firm support your long-term succession and continuity plans?12
Assess how each firm's service model aligns with your current needs and future vision. Prioritize the capabilities that matter most to your value proposition and growth strategy.
Evaluate Cultural Fit
Finding a firm that shares your values and client service philosophy is equally important. When your principles are aligned, you'll feel empowered and energized to do your best work.
As you research and meet with potential firms, look for cultural signs like:
- Mission and values - Does the firm have a clearly articulated mission and values? Do they align with your own purpose and beliefs? Are they evident in how the firm operates?19
- Leadership and vision - Is the firm led by experienced, respected professionals who demonstrate integrity? Do they have a clear vision for the future?
- Advisor support and service - Does the firm have a sincere commitment to helping advisors succeed? Are they responsive and focused on continuously improving the advisor experience?13
- Community and collaboration - Is there a strong sense of community among advisors? Are there opportunities to collaborate with and learn from other successful advisors?11
- Diversity and inclusion - Does the firm foster a diverse and inclusive culture? Do its advisors reflect the communities and clients it serves?
- Reputation and recognition - Is the firm well-respected in the industry? Has it been recognized for its culture, service, technology or other areas?18
Pay attention to how you feel interacting with each firm's leadership and advisors. Make sure their values and vision resonate with you personally and professionally.
Understand the Economics
Of course, the economics of each arrangement matter too. Carefully review each firm's compensation structure, fees, and account minimums to ensure they support your goals and clients' best interests.
On the revenue side, ask questions like:
- What percentage payout do advisors receive? How does this compare to industry benchmarks for my AUM level?12
- Does the payout vary by type of business (advisory vs. brokerage) or product? Are there any conflicts of interest?1
- Are there any minimum production requirements or quotas I need to meet?
- How are clients billed - in advance or arrears? What happens to revenue if a client leaves?
On the expense side, understand what costs and fees you'll be responsible for, such as:
- Affiliation/platform fees - Are there any upfront affiliation costs or ongoing platform fees?9
- Technology and software fees - What technology is included vs. an additional cost?
- E&O insurance - Is this provided by the firm or do I need to obtain my own?
- Marketing and growth costs - What marketing and lead generation support is included vs. my responsibility?
- Ticket charges - Are there any fees charged per trade or transaction?
Run the numbers to compare your potential take-home income and profit margins under each option. But don't make decisions on economics alone - the firm's capabilities and culture matter just as much for your long-term success.
Do Your Due Diligence
Once you've narrowed down your choices, it's time to dig deeper into each firm's background, stability and regulatory record. Some key steps:
- Review the firm's Form ADV (for RIAs) or Form BD (for BDs) to understand their ownership structure, AUM, disciplinary history, and other key info114.
- Check the firm's background and complaints history in FINRA's BrokerCheck system14.
- Analyze the firm's financial stability, growth trajectory and competitive positioning. Are they well-capitalized to invest in advisor support and technology?
- Ask to speak to current advisors about their experience with the firm. What works well and what could be improved?14
- Understand the firm's contingency plans and business continuity preparations. How would your practice and clients be protected if something happened to the firm?
- If you have a book of business, make sure the firm can support porting your clients and historical data onto their systems to ensure a smooth transition.
Don't rush this process. Take the time to thoroughly vet each firm and get your questions answered. Your long-term success depends on it.
Putting It All Together
Choosing the right RIA or broker-dealer to partner with is a momentous decision for any financial advisor. By taking the time to clarify your own values and goals, understand the different affiliation options, and evaluate each firm's capabilities, culture, and economics, you can find a firm that will position you and your clients for success.
Some key takeaways:
- Know your goals and value prop as an advisor. Let that guide your search and decisions.
- Understand the trade-offs of each affiliation model. Prioritize the balance of freedom and support you need.
- Assess each firm's full range of capabilities to ensure they can support your growth vision. Don't get enamored by a single factor.
- Make cultural fit a top priority. Working with a firm that shares your values will inspire your best work.
- Analyze the economics of each option and effects on your bottom line. But don't make decisions on money alone.
- Do thorough due diligence on each firm's background, stability and service record. Your reputation depends on it.
Choosing the right partner is the foundation for building a thriving, enduring practice. By following these principles, you can find a firm that will empower you to serve clients exceptionally well, grow with purpose, and love the work you do each day.
References
1 RIA vs. Broker-Dealer: What You Need to Know - SmartAsset
2 Broker-Dealers vs. RIAs: What's the Difference? - Investopedia
9 Assessing Payouts And Fees When Choosing An Advisor Affiliate Platform - Kitces.com
11 SEO Writing: The 10 Rules For Creating Optimized Content - Rock Content
12 What's the 'Real' Value of a Financial Advisor's Business? - Diamond Consultants
13 AdvisorNet Financial | Reputation. Relationships. Resources.
14 How to choose a financial advisor - CNN
18 How To Choose A Financial Advisor - Forbes
19 The Benefits of a Career as a Financial Advisor - Premier Jobs UK
Material prepared herein has been created for informational purposes only and should not be considered investment advice or a recommendation. Information was obtained from sources believed to be reliable but was not verified for accuracy. It is important to note that federal tax laws under the Internal Revenue Code (IRC) of the United States are subject to change, therefore it is the responsibility of taxpayers to verify their taxation obligations.
Savvy Wealth Inc. is a technology company. Savvy Advisors, Inc. is an SEC registered investment advisor. For purposes of this article, Savvy Wealth and Savvy Advisors together are referred to as “Savvy”. All advisory services are offered through Savvy Advisors, while technology is offered through Savvy Wealth. The views and opinions expressed herein are those of the speakers and authors and do not necessarily reflect the views or positions of Savvy Advisors.
