Just Because Your Friends Are Doing It Doesn’t Mean You Should Too . . . When Not to Go RIA, Hybrid, or Independent
Moorestown, NJ – You are intrigued by the prospect of going off on your own as an RIA, Hybrid, or Independent. Friends of yours in the industry have made the jump, are happy with their decision, and have shared with you the benefits they have experienced professionally, financially, and personally. But, how do you know the decision to make a transition is right for you? The fact is not everyone should go RIA, Hybrid, or Independent and there are a variety of reasons why.
From a professional standpoint, some advisors simply perform better in a more conformed retail environment. Running your own business requires a specific skill set and the management of day-to-day operations puts you in the position of “Chief Cook and Bottle Washer”, increasing both your responsibilities and restrictions on your time. You may discover you are better suited to and more successful when leaving those details to a larger retail firm and focusing solely on client-based activities.
From a financial perspective, the upside may not be as great as you think and requires a bit of evaluation as well. Certain types of practices simply do not benefit from the economic positive that you might expect when choosing to go RIA, Hybrid, or Independent. For example, advisors who rely on SMA managers for their asset management will find that it is more expensive to operate as an independent firm versus working as part of a wire-house or regional enterprise. Additionally, there are advisors who perform their job better utilizing the resources offered at a larger firm. The loss of those resources would likely result in a negative to their individual cash flow, making the cost of making a move unfeasible.
On a personal level, take a fair and honest assessment of where you are in your life and career and sincerely think through the impact of making a RIA, Hybrid, or Independent transition. For some, a smaller regional firm or a quasi-independent firm would offer the culture, freedom, and benefits they are seeking without necessarily making the jump to RIA, Hybrid, or Independent status. Also, going RIA, Hybrid, or Independent requires a wait for the higher NET payout opportunity cost of foregoing the large upfront check – on average about 5-6 years. As such, there are times when the immediate financial and personal needs of an advisor – perhaps paying for a child’s education or wedding – require the “big” check available today at a retail firm.
Understanding your capabilities and how to best put them to use for your success is important and that often means knowing when to say ‘No’ to something. Not every individual is cut out for going RIA, Hybrid, or Independent and that’s nothing to be ashamed of. Clearly and honestly evaluating yourself and your professional opportunities will most certainly lead you to the right decision in the end.
For more information on Elite Consulting Partners, their complete suite of services, most recent moves, or strategic advice that can help you, visit www.eliteconsultingpartners.com.
