Think Outside the Box and Negotiate a Better Deal Hot

0.0 (0)
Write Review


A fee-only RIA reactivating a brokerage relationship may shock industry commentators, but that’s exactly what I ran across a few months ago.  


According to conventional wisdom, most advisors started out in pure brokerage positions, then gradually evolve through various hybrid commission/fee business models on the way to joining the fee-only planners in nirvana.  


But my client decided that unless he went back -- becoming a “reverse breakaway” -- he just couldn’t get in front of the clientele he wanted to capture to grow his business, specifically other advisors he was interested in recruiting.  


He rolled his book into one of the bigger independent broker-dealers’ captive RIAs and, like a lot of these “reverse” advisors, he’s already prospering in that environment.  


My client is still an independent contractor who pays his own office expenses and works with the custodian of his choice. However, he’s open to the idea of pushing commission-based business back to the IBD and sharing in the income it generates.   


It’s a better deal, but it meant redefining his role in the industry and what he wants from his career.  


For him, it was about finding the right business model and set of partners to give his existing clients the best possible service while helping him attract new ones.  


As long as ideology and preconceptions about how an advisor’s career “should” evolve took a back seat to that goal, he found it easy to keep his eyes open and find the right partners -- even if they happened to be on the “wrong” side of the business.  


Much like their clients, a lot of advisors get hung up on the intangibles and so miss the big fundamental picture.   


Some may be so emotionally invested in their current firms that they fail to see that they’ve outgrown their platform and really need to graduate to something else.  Others have received such a strong sense of what a natural advisory career looks like that they don’t even think to investigate other options.  


The fact is, as long as you’re continually struggling to do your best for your clients, most of us consider the way you structure your business and your compensation a matter of economics and taste, not philosophical necessity.  


And advisory affiliations -- broker-dealer, RIA, or custodian -- are economic relationships that should always be evaluated purely on business terms.   


You can’t evaluate a business relationship unless you know who you are, how you fit into the industry, and how you want your role to unfold.   


Answering those questions requires some serious soul-searching. But once you have the answers, you know exactly what the parameters of your personal “box” are -- and where you can open up to consider possibilities that your colleagues may be too closed off to see.  


That knowledge can also help an advisor present himself or herself better when it comes time to make a move. I’ll talk about that soon.   


This Website Is For Financial Professionals Only

User reviews

There are no user reviews for this listing.
Already have an account? or Create an account