Let’s be honest. Our industry has changed. Between technology and regulators, the old commission-based broker-dealer model is, if not dead, then it’s dying. After being part of the broker-dealer world for over three decades, my partner and I finally saw the light and started to explore other options…

We created Key Client Fiduciary Advisors, LLC.

Who is Key Client Fiduciary Advisors, LLC?

We are an open architecture, broker-driven hybrid RIA.

We have a simple platform. Discretionary, broker-driven financial management using the widest possible range of products. We do not employ static models! We do not mandate product! We do not drown our affiliates in bureaucracy!

We offer state of the art technology through elite partners including Charles Schwab, Black Diamond, Salentica and Money Guide Pro.

On the broker-dealer side, you can choose your own or work with our partner, Coastal Equities (Wells Fargo Clearing Services)

There are 3 questions that need to be asked and answered by any broker interested in change:

What is an RIA?

An RIA is a Registered Investment Advisor. For our purposes, the important distinction is that an RIA is registered with the SEC and not with Finra. This basically means that the form of compensation is fees and not commissions (managed money vs transactions). As the graphic below illustrates, the relationship goes from the broker through a broker-dealer (Finra) to a custodian, while an RIA goes from the broker through the RIA (SEC) to a custodian. A typical advisory relationship provides less bureaucracy and better compensation models than a broker dealer model. A “hybrid” RIA is a dual model that has both an advisory arm and a broker-dealer arm, meaning that advisors can have business in both. This is the model that Key Client has adopted.

—————>Broker-dealer——>custodian
—————>RIA (advisory) ————>custodian

Most reps today at a wire house or even through an independent BD have something of a hybrid relationship. They have some percentage of their business in managed money (advisory) and also some in transactions (commissions). The concerning and frustrating problem for most reps we speak to is that they have the hybrid relationship with a broker-dealer…a large firm. This creates an environment where they receive the negatives of the broker-dealer relationship (like excessive oversight and bureaucracy) and do not get the benefits of a better compensation model and more flexibility. In other words, if you are a broker-dealer based advisor and do a decent amount of advisory business, you are being drowned in administration and are over paying your broker-dealer for the privilege.

Is an RIA for me?

This is the most important question. It is not for everyone. For starters, making the change is a big effort and for some it requires a restructuring of the way in which they do business.

Advisors who thrive in this model are more entrepreneurial and more self motivated. They believe that they need less support from an entity like a wire house. They have an attitude that shows confidence that they know how to operate successfully and ethically. They also must have a desire to grow and develop their business.

I do not say this with disdain. I just believe that this question must be answered by each advisor honestly for their own benefit.

What is the best method and place?

There are two basic tracks for an individual who is thinking RIA. The first is to create your own RIA, and the second is to join an existing RIA.

I’m not going to lie: Creating your own RIA is rewarding, but it is also a HUGE effort in both time and resources (i.e. money). This should only be considered for really large and/or multi person practices. For those that have what it takes, I urge you to go for it…we did. The reality is that for about 95% of advisors, the better option is joining an existing RIA.

That statement sets up the obvious solution…partnering with KCFA!

Key Client Fiduciary Advisors, LLC offers an answer to these questions!

The truth is that being a financial advisor is a great occupation which has been diminished due to an antiquated model. There is a better way!!! It is not right for everyone, but it is right for a few. Isn’t it worth at least a look on your part?

Contact me

Eric Fishman, Partner, Key Client Fiduciary Advisors, LLC.

973-244-4142

efishman@keyclientfa.com

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