I've been discussing with a friend of mine RIA in/outs. My understanding most RIA work with grooups/hi-networth individuals locally, most are former brokers, or investment advisors, etc. It appears it's very hard to attract money if you are starting out as RIA on your own, without being in a larger financial services, brokerage, type of organization. Is my assumption correct? Any RIA's out there?
Unless you either have "connections" or a stellar, high-profile track record.... attracting money is always difficult.
Yeah, I did it straight out of college, but I was friends with a lot of high net worth people from living on a golf course. So the connections absolutely must be there first before you go this route. If you're willing to put yourself into a quarterly pay schedule, it's a good route. I found having a part time job filled the liquidity void while I built my book of business. BUT.... once it got going after a few months and I got all of my credentials and registrations that'll put you out about 5 grand, it's not a problem to make $30,000 bucks a quarter, I guess that's $10k a month. When you're around for 10 years, assuming you've maintained good relationships, you'll be on a path to make a half mil a year after you get $50 or so million under management. Getting to $10 million was quite an accomplishment after 2 years. But hey, that's what any broker would expect from you. The real reason to go this route is the payouts. Payout starts at 25% at, say, Morgan Stanley, or Citigroup, maybe 30% in some cases. The independent Investment Advisor Rep payouts are at anywhere from 70% to 95%. It's not 100% because the custodian always needs a cut. To go fully independent and start your own Investment Advisory service would put you out about $20k at least. But if you find smaller companies to work with, and you're willing to split some of the fees, you'll be able to simply pay registrations and start for about $5k with a payout of 70% to a regular brokers at best 40%. That's the main enticement. The route you normally take is to build books at brokers, THEN start your RIA.