Creating the Independent RIA Firm Right for You

Without the operating constraints that come with being an employee of, or being overseen by, a broker-dealer, independent Registered Investment Advisors are free to create precisely the kind of advisory business they wish. For advisors who break away from the brokerage world and choose independence, this presents a world of opportunities and business choices — especially at a time when the freedom to communicate quickly and serve clients in a bespoke way is more important than ever.

For example, some RIAs choose to specialize in managing investments themselves, while others outsource investment management to specialists. Others choose to focus on wealth management or financial planning for individuals, while others focus on serving employer retirement plans.

Having the flexibility to select from an array of so many business-model options is exciting, notes Tony Parkin, Vice President, Business Consulting & Education, at Schwab Advisor Services™, whose consulting team members have helped thousands of brokerage advisors become independent RIAs. But for several reasons, the wide array of choices also can be anxiety-provoking. For one, advisors are making choices that will have long-term implications for themselves and their clients, especially in terms of technology and office requirements. Also, some advisors have only a rough idea of the business they want to build because they have never thought through all the details.

“For an advisor to have a complete and crystal-clear picture of the independent firm of their dreams, they first need to understand all the pieces of the puzzle,” said Parkin, who notes that Schwab’s in-depth design consultation process results in a custom design blueprint for each advisor and helps put every piece of the puzzle together.

Working with Schwab consulting team members, advisors are taken through a firm design process that consists of three steps: Discover, plan, and launch.

In the discovery phase, Schwab team members explore advisor needs and help bring into sharp focus their ideal firm and envisioned client experience. They discuss the advisor’s business goals and technology needs, services to be provided, as well as the advisor’s aspirations for the firm’s workplace and culture. They also explore in more depth the clients the advisor wishes to attract.

While the discovery process often leads to an advisor creating their own firm, sometimes it leads to an advisor partnering with a provider who offers pre-packaged versions of what the advisor is seeking. Other times it may lead to an advisor joining an existing independent firm. Whatever the choice, the discovery process leads to the advisor making the right decision for themselves, their team, and their clients.

Next comes the planning stage, where transition-team members draw on Schwab’s extensive transition experience and data, including results from years of proprietary RIA Benchmarking Studies, to help advisors make informed choices in key areas.

“We’ve learned that specialization is one hallmark of successful RIAs,” said Parkin. “Often, it takes the leap to true independence before an advisor allows themselves to truly think or act in terms of specialization. With the ability to finally create a firm culture, offering, and client value proposition unencumbered by the overarching demands or limitations of the mothership, independent firms can thrive through specialization and a deeper connection to the advisor’s purpose. The creation of an ideal client persona and a client value proposition unique to a firm’s focus and areas of expertise, as well as a distinct brand, is something we find in almost all top-performing firms.”

The final step in the process, launch, involves connecting advisors with specialist resources to help turn the envisioned firm’s design plan into action. These specialists help the advisor with the technology hardware and software they will need to execute on their plan, space, and furnishing needs.

“To be sure, a move to independence may require an advisor to take on greater responsibility for the human resources function, especially if they come from a firm with an employee model,” said Parkin. “That said, the additional responsibility creates numerous positive opportunities to tap into the advantages of having greater HR control, including the ability to offer benefit and incentive programs that can be powerful tools in attracting and retaining talent, not to mention managing a firm’s culture.”

Incentives such as profit- and/or equity-sharing can be powerful tools in attracting senior professionals and in planning for succession, noted Parkin, who added that, here again, the advisor need not tackle this subject alone, as there are many experienced third-party providers who support the wide range of human resource needs of RIA firms.

Other attractive opportunities for new RIAs to consider and plan for lie in the area of marketing and communications. The speed with which an RIA can communicate, coupled with a wide range of choice in terms of medium, frequency, and message, can have powerful business-building results.

“With the freedom and flexibility of independence, and the support and guidance of a custodian like Schwab,” Parkin notes, “becoming an independent RIA can turn an advisor’s dream of owning their ideal firm into a reality.”

Schwab does not supervise investment advisors and takes no responsibility to monitor the services they provide. Schwab Advisor Services™ includes the custody, trading, and support services of Charles Schwab & Co. (Member SIPC) (

This is a sponsored special feature developed by the InvestmentNews Content Strategy Studio and supported by Charles Schwab. (0920-076R)

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