Skip to main content

You are here

Advertisement

4 Factors to Consider Before Forming Your own Hybrid RIA Firm

One of the fastest growing models for advisors — especially plan advisors — is the “hybrid” model, where the advisor can function as both a registered rep under a BD or as an IAR under an RIA and have the ability to receive both commissions and fees. For an advisor, there’s a certain elegance to being able to be paid any way a client, or the product that’s right for that client, wants to pay you, especially if you work in or have clients in the small DC market.

But then you have to decide whether to join your BD’s corporate RIA or an independent group, or create your own group. Triad President Mark Mettelman argues against advisors forming their own RIA in an InvestmentNews blog post. Among the factors that he suggests advisors consider:

Size matters. Groups with less than $100 million should really consider the costs. It might be an even higher bar for plan advisors where asset fees are lower than wealth management.
Outsourcing. Should an advisor be involved with what is arguably a non-core function? Core functions are the ones that get you hired; non-core are the ones that get you fired.
Multi-custodian. Some advisors like to use different custodians; owning your own RIA may limit that option.
Succession Planning. Your options might be more limited with your own RIA.

What’s right for you? Like most important matters, that depends.

Advertisement