How should I work towards owning an RIA firm?
I am an Active Duty service member that has a desire to begin financial counseling and asset management. The width and depth of articles I have read have ultimately led me in circles as to what is absolutely needed. As I do not plan on leaving active duty, this would be something I pursue at a slow pace, over time, ideally allowing me to retire from the military already managing $2-3 million in assets. I have began my series 65 preparation and am also studying for the CRPC designation. I only have interest in doing this on a fee basis.
Once registered as an RIA, with my own business, am I able to take assets under management? What can I do with those assets if I do not posses the series 6 or 7 licenses?
You can begin managing money even before you are registered as long as you don't take on more than fifteen clients. You do not need a Series 6 or 7 in order to manage assets; passing the Series 65 exam is sufficient. You will have to register in the state where you live, and if you end up with six or more clients in another state then you will have to eventually register there also.
You should immediately begin contacting potential clients and having them refer people to you. It will probably be slow at first, but eventually you should be able to build up a book of business.
The most important thing is to develop a solid reputation.
Check out the resources at https://www.xyplanningnetwork.com/ They have podcasts, blogs and a lot of information to help guide you through this. But I would also suggest reaching out to fee based firms in the area you want to live and ask for a meeting. You may find someone willing to bring you in and help you get started instead of having to create it from scratch.
Good for you. I wish everyone set goals in their life and worked to achieve them.
Probably the best path to your own RIA firm is to work first at an established RIA firm. If you have good contacts (and a few million in assets you can bring on board) you should have no trouble finding a firm to hire you. Then, pay your dues. Learn the business from the bottom up. It involves a lot more than what you would find in articles.
I did this. I went to work for a firm that managed assets for wealthy individuals. I brought in new clients for the firm. After twelve years the owner retired, my partner and I bought him out, and we have worked together as co-owners now for 14 years. We manage more in assets than we would had we tried to build a firm from the bottom up. It's a fulfilling career and I hope you will also find it to be so.
First fo all, thank you for your Service! My Chief Strategist, Tim Reazor, was a former Marine who did 3 Tours as a Helicopter Pilot in Iraq before working for me in a fee based (Series 65 only) industry. So if you have any direct questions, you can certainly reach out to me. So as I stated, we are a fee based only RIA & I dropped my Series 7 in the late 90s. If you have your Series 6 (mutual funds & annuities only) or Series 7 (stocks, bonds, mutual funds etc..) then you must be a Registered Representative of a Broker/Dealer. That means there are conflicts of interest with the clients. Doesn't mean you can't manage them, but they exist.
My feeling is life is too short, why have conflicts if you can avoid them. So I like our business model much better that the "dually licensed" Series 65 & Series 7 because there are still conflicts your client and at least your broker/dealer even if you charge a flat fee. The client always has to be on guard for the funds or investment choices recommended to make sure they are the best fit and not because of a fee arrangement between the broker/dealer and the fund/investment.
The downside is the fee based model starts off lean while you build your business and client base. In the registered rep model, many times the Broker/Dealer will "subsidize" you first year or two salary that will be against your commissions or fees. So if you can live lean for a year or two, I personally believe it is a much better, conflict free business model that is better for the Advisor and the Client.
To answer your Assets Under Management (AUM) question, yes once you are are registered witht the appropriate regualory bodies, you can begin to tak in assets under your newly establised RIA. Alternatively, you could join an existing RIA that is a good fit for you & then don't have to deal with the intial start-up costs & ongoing compliance issues (as much). Just some insight from a Fee Based Only RIA.
Best of luck and Hope this Helps, Dan Stewart CFA®
If you succeed in attracting client assets to manage, you will need to have a relationship with a custodian -- these are financial firms that actually hold the client money and investments and provide access to a broker to facilitate the buying and selling of investments. In theory, you can attempt to be assigned rights and access as adviser by whatever custodian already holds the client assets, but in practice RIA custodians require advisers on their platform have $X million assets minimum, or a plan to get to $X in a year or two.
As a fee only RIA, you do not necessarily need the brokerage licenses, as you are not "brokering" trades and getting a commission; instead, you are essentially acting on your clients' behalf to communicate trade requests to their broker, who does get paid a commission for executing the trades.
None of the above should be taken as formal legal or regulatory advice, and you should know that each state has their own specific approach to regulating registered investment advisers.