Anyone a Financial Planner, and started their own RIA?

[JohnGingerwood]

I am considering breaking away and starting my own fee only RIA firm. Just looking to see if anyone has done this and where are the pros/cons, and has it been worth it? Thanks!

[glenn_herwig]

Would also like to hear some input as I am studying Financial Services in college.

[CamSLC]

Not many responses yet, so I'll thow out.. I was with a larger broker for several years and know a few people who left down the RIA path.

One is successful, he joined a team of 3 under a local company. They are all CFP, one CFA. Which gives them a leg up. They charge a fixed fee to consult new clients on their entire financial picture then a simple fixed fee regardless of assets opposed to advisers charging bips on your total AUM with them...

The others ended up in other fields. It seems like the first years are hard to get over the hump, but can be gainful if you make it. Like most careers

[singe89]

On the 401k side of the business and my partners and I have started, purchased and sold a few RIAs over the last decade.

We sold one of them to LPL, started a new division and then worked at LPL for around 6 years recruiting advsiors and helping them start their own RIAs or join other hybrid OSJs.

To start your own really comes down to your revenue and how much time you want to spend doing your own compliance or hiring, paying and managing employees. Our last RIA was an aggregator with a 95% payout with over $70B in AUM. Even larger advisors had to decide if starting their own RIA and running it was worth it vs a 5% haircut. The RIA was also able to provide tools and technology because of the scale so more often than not it made more sense to join an RIA than start their own.

The independence, flexibility of products and ability to service your clients under the RIA model is hard to beat.

[BT1985]

I am in the broader industry but a different scope. I have friends who have done this. The main reason to do this is for autonomy. You keep the revenue without the kickback to the BD and you are your own boss but that comes with a cost. You now have no back office support, marketing support, compliance, tech, etc.. So the excess revenue you keep can easily get gobbled up by hiring in house personnel and outside vendors. It’s like having a baby, once you create this entity you have to keep feeding it and it is your responsibility. You would probably want over $200 million AUM at minimum to start and be able to scale to over a billion (depending on your location, lifestyle and ambition) to be able to maximize the incremental revenue over your fixed costs. I have known people that have done this and got complacent that didnt try to grow assets and watched their books bleed as retirees died off and money transferred to their children who moved it to low cost brokers like Vanguard. You better want to be a business owner.


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[GingerS]

I think the investment management business is changing/becoming more automated quickly, I think there will always be a need for a trusted financial advisor. It may be a great time to start an RIA. Anyway I think it's better to consult with professionals. Based on my own experience I can suggest Jafton custom dev company. They helped me with website development a lot.