In my last blog post, I spoke about creating your own RIA versus joining an existing one. Today, I’ll expand on the latter and offer guidance on what to look for when evaluating an RIA partner.
It comes down to three key considerations: culture, services and cost.
Your first step in examining prospective RIA partners: look at their culture. One that embodies a culture that closely resembles yours will set the stage for a successful working relationship. Of course, this means you must first know your own. If you don’t know what that is, time to define it. It may sound simplistic, but identifying your own culture is the single most important thing you can do.
Not sure how? Start with this one basic rule: Do not lie to yourself! Honestly ask yourself, what are the key elements that make you who you are?
- Am I an active or passive manager? If active, am I aggressive?
- Do I use models?
- Am I proactive with my clients, or more reactive?
- Am I a financial planning-based advisor, or not?
- Am I really working to expand, or am I more in “maintain mode?”
The answers to these and other questions will help you to quickly
define your culture. Once done, turn your attention to your prospective RIA
partners. Ask questions of them. Find out how they operate and determine how
well their culture matches your own.
Services That Map to Your Goals
Once you’ve defined your culture and know what to look for in a partner, start zeroing in on a service platform that matches your goals. For example, if you’re a financial planning-based advisor, you may want an RIA partner that has a robust suite of financial planning tools. If you’re one who uses models to invest client assets, you’ll likely want one that is permitted. Technology-minded advisors might want to know things like what the RIA partner’s technology platform looks like, whether they provide a CRM and/or a portfolio management platform and if they offer a comprehensive website and mobile app for clients.
Examine whether the services provided by their custodian partner are a good fit for your business style. For example, if you’re a trader who makes a lot of transactions, you might want to know the ticket charge fees.
The Cost Factor
Our discussion wouldn’t be complete without a deep dive into costs and fees. In my experience, it’s better when costs are presented in a straightforward and simplistic fashion, as opposed to the multi-line menu of charge after charge. And while you’ll want the RIA and its custodian partner to be competitive on costs, don’t lose sight of the bigger picture. For example, do they offer services that can help you expand and grow your business—and do the costs and fees map accordingly?
I find too often that advisors make the same mistake that clients make: they over-focus on costs. In a quickly changing environment, look for the appropriate service package not only as it pertains to where your business is today, but also how it will enhance your practice in the future. In fact, a good RIA partner may offer services that you may not currently need, but may become important in the months and years ahead.
Deciding you’re ready to join an RIA is just the beginning. Do your due diligence so that you pick the one that’s right for you.
To learn more about RIAs, contact our team today.
Key Client Fiduciary Advisors, LLC (“KCFA”) is an SEC-registered investment adviser located in Fairfield, New Jersey. This blog post is limited to the dissemination of general information pertaining to KCFA’s investment advisory services. The information in this blog post should not be construed as personalized individual advice. A copy of our KCFA’s written disclosure statement as set forth on Form ADV, discussing KCFA’s business operations, services and fees is available upon written request.