Registered Investment Advisor For Sale


Organic Growth Rates Are Slowing Down

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So the number one reason that more firms are looking to acquire is because, as they get larger, they’re more capable of doing the acquisitions because they’ve built the staff and the infrastructure already. But there’s a second effect that goes along with this trend as well: our organic growth rates may be slowing. If you look at all advisory firms in the aggregate, and you strip out the market growth and just look at actual organic growth , advisory firm growth seems to be slowing.

I suspect this is driven in part by the simple fact that there aren’t as many unattached clients now, as there were in the past. I see this in our own firm. Our approach talks with prospects years ago would be us, a product salesperson at a broker-dealer, and the prospect’s brother-in-law who sells life insurance and “sort of” gives advice on the side. So it would be us as true adivsors, against some folks that were more product based. We had a full-on advice offering, and we won most of the client business.

Battle For Regulatory Oversight

Although the SEC and the states have the responsibility of overseeing RIAs, FINRA has spent the past several years lobbying Congress to let it take on the task, even attempting to get a bill passed to that effect in 2012. FINRA claims that research shows that the SEC cannot adequately oversee the RIA industry by itself, and either needs more resources to do so or else needs to cede oversight of RIAs to a self-regulatory organization such as FINRA.

Indeed, a study done by the SEC itself in 2011 showed that the government only had the capacity to review less than 10% of all RIAs under its jurisdiction in 2010. FINRA has maintained that it has the resources to effectively oversee and review all RIAs on a regular basis.

However, the RIA community has fought to stop FINRA from intruding upon its territory. The cost of administrating this additional regulation would place a heavy financial burden on advisors, and many smaller firms would likely be put out of business.

Many RIAs also view FINRA as an ineffective organization that is heavily biased toward the broker-dealer community, and some statistics indicate that FINRA has ruled substantially in favor of the major wirehouses in arbitration cases where clients sought large amounts of money in transactional disputes.

Advisors also see FINRA substantially lowering the protection given to RIA clients now, as RIAs are legally required to act in a fiduciary capacity for their clients at all times.

The Costs Of A Financial Advisor

A rule proposed by the Department of Labor would have required all financial professionals who work with retirement plans or give retirement plan advice to provide advice that is in the clients best interest , as opposed to simply suitable for the client . The rule was passed, its implementation was delayed and then a court killed it.

But in the roughly three-year interval between President Obama’s proposal of the rule and its eventual death, the media shed more light than it had previously on the different ways financial advisors work, how they charge for their services and how the suitability standard might be less helpful to consumers than the fiduciary standard. Some financial advisors decided to voluntarily move to a fiduciary standard or more heavily promote that they already operated under that standard. Others, such as certified financial planners, already adhered to this standard. But even under the DOL rule, the fiduciary standard would not have applied to non-retirement advice.

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#officehours With @michaelkitces Video Transcript

Dean Erickson, CFA

Welcome, everyone. Welcome to Office Hours with Michael Kitces. Or, as you can see from the background here today — Airport Hours with Michael Kitces!

This week I want to talk about buying advisory firms.

Chuck sent me the question for this week:

How do I find practices in my area that want to be purchased? I’m a buyer. How do I find the sellers?

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Decide How Much You Can Pay Your Financial Advisor

It used to be that financial advisors charged fees that were a percentage of the assets they managed for you. Today advisors offer a wide variety of fee structures, which helps make their services accessible to clients of all levels of financial means.

Commission-only advisors may seem free on paper, but they may receive a portion of what you invest or purchase as a payment. These free financial advisors typically are available through investment or insurance brokerages. Remember, these advisors may only be held to suitability standards, so they may end up costing what you would pay for a similar financial product suggested by a fiduciary financial advisoror more.

Fee-only and fee-based financial advisors may charge fees based on the total amount of assets they manage for you or they may charge by the hour, by the plan, through a retainer agreement, or via a subscription model. Common average financial advisor fee rates are listed in the table below:

Financial Advisor Fee Type

When evaluating advisors, be sure to consider their credentials as well as research their backgrounds and fee structures. You can view disciplinary actions and complaints filed against financial advisors using FINRAsBrokerCheck. And remember, just because someone is a part of a financial planning association, that doesnt mean theyre a fiduciary financial advisor.

How Much Do Ria Charge In Fees

RIAs generally charge clients annual fees equal to a percentage of the assets they manage. In 2019, the average RIA fee was 1.17% of assets under management . That means that a client with $100,000 in assets managed by an RIA would pay the firm $1,170 per year for their services.

However, other fee types are becoming common as advisors work with clients in new ways. There are many ways that you can engage with an advisor, such as for an hourly or project-based fee, a retainer, a minimum fee or a fee based on assets or income, says Jennifer Grant, a certified financial planner with Perryman Financial Advisory in Dallas.

With these new models, you may be able to pay $200 for an hour of consulting, a flat fee on a monthly basis or a $1,000 fee for a year of all the advice and guidance you need. During an introductory consultation with an RIA , they will help you determine what kind of relationship and pricing makes the most sense for your needs. Keep in mind that not all RIAs offer alternative pricing models, and you may have to shop around to find one who offers the kind of relationship and fee structure you want.

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Learn About The Different Types Of Financial Advisors

Theres no federal law that regulates who can call themselves a financial advisor or provide financial advice. While many people call themselves financial advisors, not all have your best interest at heart. Thats why you have to carefully evaluate potential financial advisors and make sure they are good for you and your money.

Part of learning about the different types of advisors is understanding fiduciary duty. Some, but not all, financial advisors are bound by fiduciary duty, meaning that they are legally required to work in your financial best interest. Other people who call themselves advisors are only held to a suitability standard, meaning they only must suggest products that are suitable for youeven if theyre more expensive and earn them a higher commission.

Regardless of which kind of advisor you choose, you should make sure you know how they earn money. This helps you determine if their recommendations are actually better for youor for their wallets.

Heres how to think about the different types of financial advisors:

It’s A Seller’s Market With 50 Buyers For Every Retiring Advisor

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This combination of factors has led to some interesting shifts in the industry.

The prediction for a long time was that we’d have this giant wave of baby boomer advisors, all approaching retirement, who would begin to sell their firms en masse. A point we “should have” reached already, as the average age of advisors is mid-50s or so, and early baby boomers advisors are already well into their 60s.

Instead, though, what we’re finding when we look at platforms like FP Transitions, one of the biggest marketplaces for advisors, is that when a seller lists on their platform, they get 50 buyers interested for every seller — a 50:1 ratio! So in theory, we’re supposed to have the selling wave and it should be a buyer’s market. In reality, though, it’s a sellers market! You’re a very popular date if you’re actually selling, right now! Overwhelming number of buyers. Very, very few sellers.

I strongly suspect the lack of sellers is because we’re all discovering that financial advising is one of those businesses where you can “die with your boots on”, like a cowboy that just keeps on riding until the very end. Because financial advising, frankly, it’s not a very intense manual-labor kind of business. As long as the brain still is functioning and you like having relationships, it’s a very rewarding business. It’s rewarding, personally. It’s rewarding, financially.

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Becoming A Registered Investment Advisor

Those who wish to work as independent financial advisors to individual investors, to manage assets or provide financial counsel, generally need to become a registered investment advisor . Unlike that of a financial plannera broader profession, with no legal mandates for training or licensingthe road to becoming an RIA has specific requirements.

Gain Control Of Your Advisory Business With Orion Tech

When it comes to advisor transitions, preparation is the key to success. It can be one of the most rewarding choices an advisor can make in his or her career, but also quite an undertaking. The more prepared you are, the easier it will be to get to the opportunities on the other side.

If you are thinking of transitioning your business, contact our team of experts to receive the support, technology tools, and resources you need to get started.

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Financial Advisor Business For Sale

A busy schedule can thwart plans to put a financial advisor business up for sale. The realities of a successful practice are that its tough for advisors to find the time to create an offering memorandum, identify the most ideal prospective buyers and then respond to numerous inquiries during a typical business day. These are just some of the issues financial advisors are required to deal with when attempting to market and sell their business on their own.

The merger and acquisition services available through AdviserXchange are primarily designed for advisors wanting proactive assistance when marketing their financial advisor business for sale. Our relationship with each client begins with the completion of a confidential business survey so that we can quickly gain an understanding of your operation. The information compiled from this survey also forms the basis of the offering memorandum utilized to market your business to pre-qualified buyers.

We Help Cultivate Buyer Interest in a Financial Advisor Business For Sale

The bottom line is that AdviserXchange connects sellers who want to market their financial advisor business for sale to the right buyers without having to expend an inordinate amount of time on the process. Once that connection has been made, well then help you reach a successful conclusion to the transaction in a smooth and efficient manner. You can start the process by giving us a call or submitting your contact information to us today.

Get Started

The Financial Health Questionnaire

Patton Financial Advising

A financial advisor will work with you to get a complete picture of your assets, liabilities, income, and expenses. On the questionnaire, you will also indicate future pensions and income sources, project retirement needs, and describe any long-term financial obligations. In short, youll list all current and expected investments, pensions, gifts, and sources of income.

The investing component of the questionnaire touches upon more subjective topics, such as your risk tolerance and risk capacity. Having an understanding of your risk assists the advisor when its time to determine your investment asset allocation. At this point, you’ll also let the advisor know your investment preferences as well.

The initial assessment may also include an examination of other financial management topics, such as insurance issues and your tax situation. The advisor needs to be aware of your current estate plan, as well as other professionals on your planning team, such as accountants and lawyers. Once you and the advisor understand your present financial position and future projections, youre ready to work together on a plan to meet your life and financial goals.

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How To Choose An Ria

Always do some careful research before selecting an investment advisor. You need a firm that is aligned with your interests and needs. An excellent source and starting point is the SEC’s Investment Adviser Public Disclosure website, which allows you to search for every RIA in the country. Once you select those firms that fit your location requirements, you can review each firm’s website and social media. Also,

  • Check the type of services they provide: The type and level of advice RIAs provide can vary widely from firm to firm, so make sure the areas they focus fit your needs.
  • Check their Form ADV: RIAs are required to file Form ADV, which is the uniform form used by investment advisors to register with both the SEC and state securities authorities. The form, which should be offered to you by the firm you are interested in, provides detailed information about the firm, from fees and client types to assets under management and more.
  • Check their assests under management : Search the total AUM of the firm you are interested in by using the SEC’s Investment Adviser Public Disclosure website, and compare them with yours to see if your assets are on the low or high side for the firm.

Take Your Ria Further

Find out how far you can take your practice with RIA-specific resources and growth experts who understand the nuances of your business.

Learn how you can benefit from:

  • Advisor-focused technologyOur open-architecture platform puts you in the drivers seat. A single, integrated workstation to service all your clients with the flexibility to integrate the best-in-class third-party tools you may already be accustomed to. Tailor your system to meet your needs.
  • Risk management optionsChoose whether to run your own compliance and risk management program under your fee-only or dually registered RIA, or outsource it to us under our Corporate RIA.1 We are the only leading custodian to offer this option.
  • Mergers and acquisitions supportFind a buyer or seller through our match program, get help structuring a deal, and access capital through our M& A solutions.

Learn why successful RIAs look to us as their trusted source for comprehensive advisor solutions in a business environment thats increasingly difficult to navigate

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How Do You Register As A Registered Investment Advisor

A firm can register as a registered investment advisor by filing Form ADV with the Securities and Exchange Commission. Within 45 days of the filing, the SEC must either grant registration or begin proceedings to deny it. In addition, RIAs are also required to abide by the “brochure rule,” which requires them to inform clients with information about their practices, educational, and business background. RIAs must also maintain accurate books and records, subject to examination by the SEC.

Financial Advisors Who Earn Commissions

Whys India short on registered investment advisors?

Some financial advisors make money by earning sales commissions from third parties. Among financial advisors that earn sales commissions, some may advertise themselves as free financial advisors that do not charge you fees for advice. Others may charge fees, meaning they derive only part of their income from third-party commissions.

Either way, financial advisors who earn third-party sales commissions derive some or all of their income from selling you certain financial products. If you choose to work with a financial advisor who earns sales commissions, you need to take extra care.

Commission-only advisors are not fiduciaries. They work as salespeople for investment and insurance brokerages, and are only held to suitability standards. In contrast, some fee-based financial advisors are fiduciaries, though its important to determine if theyre always acting as fiduciaries or if they pause fiduciary duty when discussing certain types of products, like insurance.

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Keep in mind, commissions arent bad in and of themselves. Theyre not even necessarily red flags.

Some financial products are predominantly sold under a commission model. Take life insurance: A fee-based planner who receives compensation for helping you purchase a life insurance policy may still have your best interests at heart when advising on other financial products.

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