Navigating the RIA landscape: First stop the corporate RIA

In today’s marketplace, the majority of financial advisors are affiliated with a broker-dealer and operate under their broker-dealer’s corporate RIA as an Investment Advisor Representative (IAR). In this full-service model, in almost all cases, the clearing firm and custodian are fully integrated, allowing the financial advisor to utilize their broker-dealer for commission and fee- based services. The full-service model is the more integrated and streamlined model when utilizing a broker-dealer relationship.

Whether choosing to work as an employee or an independent advisor of the broker-dealer, both sets of advisors carry a series 6 and/or 7 license, are regulated under FINRA and may conduct fee-based (advisory) business as an IAR (66 or 65 license) using their broker-dealer’s corporate RIA. The full-service model is primarily the only permissible model for wirehouse, regional and financial institution affiliated advisors. Additionally, some of the independent broker-dealers still prohibit their advisors from using an outside RIA.

The full-service model is a turnkey solution for the advisor who wants to run a commission- based and fee-based practice with the overall support and guidance of the broker-dealer.

4 Reasons Why Some Financial Advisors Embrace the Model

1. Advisors can offer clients a variety of investment products, managed accounts or packaged products on either a commission or fee basis.

2. The broker-dealer provides complete and comprehensive support with compliance, technology, advisory guidance, research, reporting, client account billing and back office assistance.

3. Since the clearing firm and custodian are fully integrated (in almost all cases), technology is cohesive for the ease of trading, client reporting and operational support.

4. The independent advisor under this model is able to create a unique brand, marketing materials and office space to reflect his or her business style.
Tom Daley, is the Founder and CEO of The Advisor Center, a comprehensive online community where financial advisers can objectively—as well as anonymously—research broker-dealers, RIA custodians, RIAs and branches.