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Video: What advisors should consider when exploring the RIA marketplace

The Experts Ask, Brad Wales, Founder, Transition To RIA

Split screen video conference call with Brad Wales and Matt Sines

Whether you are considering independence or an established RIA, our Experts Ask series offers useful perspectives and best practices to help you improve your business. In each episode we sit down with industry experts to discuss the questions advisors should be asking themselves, and the industry, to fuel their success.

Today, we are talking to Brad Wales, founder of Transition To RIA, about what advisors should be asking if they’re thinking about making a move into or within the RIA space.

How do you navigate the differences between the various business and affiliation models you encounter in the RIA space?

We all know the financial services industry has its fair share of jargon. In the RIA space, you often hear terms like platform, aggregator, and hybrid solution. It’s hard to find the best fit for you without understanding what each solution offers. It’s good to have so many choices, Brad says, but it does introduce complexity into evaluating your options. Brad encourages advisors to take the time to do their homework before deciding on which partner or partners are the best fit.

Why would the RIA model be better for my practice?

Brad says, it typically comes down to two main things: economics or flexibility. From an economic standpoint, the higher take-home is a draw. You also generally have more opportunity to grow your practice faster than you would under the constraints of the broker dealer model. The ability to generate greater enterprise value is another plus of the RIA model. Brad says there is also generally more flexibility for an advisor to grow and market their practice in the way that makes sense for them in the RIA space.

What should an advisor expect as their net payout in the RIA space?

Brad challenges advisors to reset their thinking about what a payout really means. No matter what model you operate in, your payout should be evaluated in terms of what you value you get in return for the fees you’re paying. For example, at a wirehouse they provide things like office space and staff, and your payout covers those costs. Try to quantify the dollar amount you’re paying and consider whether you feel you’re getting enough value in return. That said, Brad estimates that reasonably sized and well run independent practices can generally expect to net 60% to 70% of the gross fees they bring in, before owners’ compensation.

Ready for more insights from Brad? Watch his full interview.

The Experts Ask: Brad Wales