Inside Chuck Failla's RIA crusade

One might think wirehouse operators consider Chuck Failla, CEO of Sovereign Financial Group and host of goRIA, as public enemy number one.

 Not that it bothers him much.

“I would consider that a compliment and certainly a badge of honor,” said Failla.

Failla started his crusade to steer more advisors towards the independent route about five years ago when he dropped his series 7 and series 24 licenses and went full on RIA, leaving the broker dealer world behind. At first his goal was to simply bring other folks into Sovereign Financial, using educational marketing as a tool.

Eventually that small outreach turned into a full-on crusade. He set up a media franchise called GoRIA.com to provide education to advisors looking to leave the broker dealer (BD) world. And now he hosts forums, both in person and virtual (often in tandem with InvestmentNews for full disclosure) with the goal of opening the eyes of BDs to the RIA world – and maybe even taking the same leap he did.

So what’s Failla’s pitch?

It’s pretty simple actually.

“More money, more freedom,” said Failla.

“The higher payouts are generally what piques advisor interest in the RIA space at first,” said Failla. “However, while talking with RIA’s that made the jump, I found that the additional freedoms to run their business as they want, have the technology that they want, to sell the products that they want proved to be almost equally as important.”

In response to the old Wall Street question “Where are the customer’s yachts?” Failla says the clients prefer RIA independence as well, something they may not have noticed much in the past.

“What's really driving this in large part is more clients are demanding fiduciary advice, and the RIA space is the home of fiduciary advice,” said Failla. “The broker dealer side has the ‘best interest’ rules, which is kind of like fiduciary lite.”

Despite his firm belief that the RIA way is the far better option for advisors to earn a living, Failla is ambivalent on whether it will ultimately supplant the BD model.

“The BD world is a great product delivery service and solution,” said Failla. “But it's not really good for advice delivery. So for those individuals that are going to do it yourself, the institutional or even the very sophisticated individual investors that want to buy and sell their own stocks, the BD space is great for that.”

At least Failla sees a role in the wealth management arena for BDs, even if it is limited or suboptimal one. When it comes to PINOs, or “Planners In Name Only,” as Failla has dubbed them, however, he seems to hold a higher dose of skepticism.

“What we're trying to do is draw attention to the advisors out there that are essentially going through the motions of advising, but all roads lead to indexed universal life insurance,” said Failla. “And that's not to say that those ideas are bad, but they're oftentimes oversold and oftentimes they're oversold because of that commission component.”