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Should You Start Your Own Firm

Or Join An RIA?

“Should You Start Your Own Firm Or Join An RIA?”

   26th March 2022 by Gareth

   26th March 2022 by Gareth

There are many options for career growth available to Series 65/66 holders. Ranging from working under a full-service broker-dealer, starting one’s own RIA, to joining an existing RIA. Furthermore, if an advisor were to start their own RIA, they further have the option to engage the services of a middle office or build in-house capability. Each available option has its own set of drawbacks and benefits. The right path is dependent on a number of factors, and there is no one-size-fits-all solution.

Many advisors wait until their AUM is over some arbitrary number such as $10M or $20M before they consider a change of path. However, your AUM should not be the sole determining factor. Contrary to popular opinion, it is possible to start an RIA starting with no book of business. On the other hand, even financial advisors with over $100M AUM often find it advantageous to join an existing RIA instead of starting their own firm. Thus, it is not the AUM but rather one’s personal preferences that should ultimately dictate one’s chosen path.

The Case For Starting Your Own RIA

The single most favorable reason for starting an RIA is the degree of control you can exercise in running and scaling your business. You get to decide on the various solution providers that will ultimately support your RIA, including compliance consultants, technology, and custodial services. Today, there are hundreds of providers available for any given function of your business. If you enjoy being in control of the business as a whole, this could be a favorable option for you. 
Secondly, it is also generally touted as the more profitable choice between joining an existing firm and starting one. This is since you do not have to pay additional margins needed for an intermediary party between you and the service providers. However, it is important to note that at the large economies of scale afforded to many existing RIAs, these margins can be both cost-competitive and beneficial to the advisor.

The downside is that you are solely responsible for building and managing your own ecosystem of service providers and internal resources. Everything from negotiation of prices to technology integration and contracts falls on your shoulders. This can be exciting for a particular breed of advisor that values having a greater degree of control, particularly if they have a very specific vision for the future of their business.

On the other hand, there are many advisors who instead prefer to focus on a narrower range of responsibilities such as asset gathering.

The Case For Joining An Existing RIA

Every RIA is different and offers a unique combination of benefits, each catering to a certain type of advisor. They all however, offer to reduce the burden of piecing together and dealing with service providers and the infrastructure needed to start one’s own firm. Typically the RIA handles custodian services, compliance, fee billing, and technology. They may additionally offer varying levels of marketing support. As a result, this allows the advisor to focus on client-facing responsibilities in their business.
Counter-intuitively, it may also be economically advantageous to join an existing RIA firm over starting one’s own. This is since economies of scale allow various RIAs substantial pricing advantages on technology which can be passed on to their advisors. But even in instances where there is a marginally additional cost to working with an existing RIA — it can be a beneficial trade off given the reduced complexity and the focus it affords the advisor. The downside of this option is it often comes with limitations and standardizations that advisors must be okay with. By design, it affords less flexibility. For instance, at Portfolio Medics, advisors may not trade on client accounts. Moreover, tech-savvy advisors may much prefer to build out their own stack rather than work with a pre-built one.

Would you prefer a turn-key solution with lesser flexibility — or have all the control and flexibility of your own firm, but where you are responsible for all the moving parts of the business?

Ultimately, the decision boils down to your individual long-term objectives and preferences.

Portfolio Medics is a uniquely-positioned boutique investment advisory firm, designed to give advisors the best of both worlds.

On the one hand, representatives enjoy flexibility akin to starting one’s own firm. For example, all our rep positions are 100% remote and you have complete control over when, how and who you work with.

Plus, you enjoy a generous payout grid with no tech or platform fees. You are provided unlimited marketing support and on-demand guidance and coaching from industry vets.

So if you’re looking for:
  • A powerful story that can help you differentiate and get in front of more clients
  • Alternative investment strategies that aim to help clients succeed even in bear markets
  • Generous payout grid with no technology or platform fees
  • ​Streamlined compliance that enables you to market with ease
  • ​100% remote with minimal interference in your day-to-day practice
Click the button below to schedule a call with our recruiting team.
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Portfolio Medics is an SEC-registered investment advisory firm. 
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Phone: (239) 444-1766

Advisory services offered through Portfolio Medics.

Views expressed by Portfolio Medics are theirs alone. This summary is for informational purposes only and shall not constitute advice and are not an offer to buy or sell, or a solicitation of any offer to buy or sell investment products. Different type of investments involve varying degrees of risk, and there can be no assurance that any specific investment will either by suitable or profitable for your portfolio. All investment strategies have the potential for profit or loss and past performance is not guarantee of future success. Economic factors, market conditions, and investment strategies will affect the performance of any portfolio and there is no assurances that it will match or outperform any particular benchmark. Past performance is no guarantee of future performance or profitability. The types of investments discussed also do not represent all the securities purchased, sold or recommended for clients. Stated information is derived from proprietary and non-proprietary sources that have not been verified for accuracy or completeness. While the firm believes this information to be correct, we do not claim or have responsibility for its completeness, accuracy or reliability.