What Are The Largest Expenses Of Running An RIA? 

I'm Brad Wales with Transition To RIA (TransitionToRIA.com). This is episode #63 of my question and answer series where I answer Registered Investment Advisor ("RIA") related questions I get from advisors just like you. In this episode.....
Don't confuse the expenses of running an RIA as being "new" expenses compared to what you have now.
Depending on your current affiliation model, you are likely already paying these expenses, they are just embedded in the payout you receive.
In the RIA model, you have much more control over how to manage these expenses.....TO YOUR BENEFIT!
In this episode I discuss five of the largest expense items of a modern day advisory firm, and how to best manage them:
Office space
Team members
Technology
TAMP
Compliance
Come take a look!
What I do: At Transition To RIA I help financial advisors understand everything there is to know about WHY and HOW to transition their practice to the Registered Investment Advisor (RIA) model.
RESOURCES & LINKS
___________________________________________
🔹 Website: TransitionToRI...
🔹 Show notes: TransitionToRI...
🔹 Contact me: transitiontori...
🔹 List of all questions I've answered: transitiontori...
🔹 Podcast: transitiontori...
🔹 Whitepaper ("11 Ways The Economics Of The RIA Model Are Superior To Other Advisor Affiliation Options"): transitiontori...
🔹 Transcription of video:
What are the largest expenses of running an RIA? That is today's question on the Transition To RIA question and answer series. It is question #63.
Hi, I'm Brad Wales with Transition To RIA where I help you understand everything there is to know about why and how to transition to the RIA model.
If you're not already there, head over to TransitionToRIA.com. You can find all the resources I make available, from the entire question and answer series in video format, podcast format, I have whitepapers as well. Again, everything at TransitionToRIA.com. Check it out.
On today's episode is a question I get asked frequently. In addition to being asked about what the bottom-line income of the model generally is, I am often asked, "What are some of the largest expenses of running my own RIA? What does that look like? What are those costs?"
It's hard to give an across-the-board answer on some of those because every practice - this is one of the benefits of the RIA model - every practice is unique regarding what their overhead costs will be, what services they will offer, etc. So it's hard to give any one answer of, "It would cost X dollars."
In this episode though I will go through some of the biggest expense drivers and give you some perspective on how to consider them, how those prices can fluctuate, what you can do about it, etc.
To start, I want to frame it with what the exercise is of leaving a firm/affiliation for the RIA model is. Whether you're at a W-2 type firm, like a wirehouse firm, or you're at an independent broker-dealer firm, or maybe you're even at an existing RIA and you want to breakaway and start your own, the exercise of transitioning into the RIA model is to ask yourself, "What does my current firm provide for me now? And how will I replicate that if I start my own independent shop?"
I have a checklist on this that helps visualize that process. If you'd like it, reach out to me, I can send it over to you. But that's the exercise, at its most basic level, saying, "What are they providing for me now?"
If you're at (for example) a wirehouse firm, they’re providing you things like an office, technology, for better or worse, they're providing compliance, etc. And so, you identify what is being provided for you, and then you identify how will you replicate it on your own. The goal is to do it for less money than it's currently costing you, as well as provide you more flexibility with what you want to do with your practice.
Having that conversation is something I do with advisors all the time. Walking through these variables. In this episode, I want to dive into a couple of them.
Now, don’t think of this as I'm going to have to “pay” for certain things. The reality is you are paying for these things now. Go through that checklist, and say, "What does my current firm provide for me now?" You are paying for those items. It's just as part of your payout.
You might have heard me say before - I've written a number of articles on this as well - I always encourage you to look at your "payout" in the inverse.
Using very simple numbers, assume you are at a wirehouse firm and you are producing $1 million in trailing-12 production. Con't.....
View remainder of transcription here: TransitionToRI...
Disclaimer: transitiontori...