Those were among the pointed questions raised by participants in a "Joining an RIA" panel run by Schwab Advisor Services Tuesday afternoon. Among the others fielded by Jeff Leventhal, a managing director and partner at the Hightower Group, and Landon Yoshida, of IK Wealth Management Group: How long did the process take? And: How has your focus changed from investment management to cover other services?
As advisors continue to leave wirehouses for RIA firms and independent broker-dealers, Leventhal and Yoshida told peers about their own experiences shifting away from the big Wall Street firms. A survey of participants found that freedom was a powerful draw, along with the potential for greater income.
Going It Alone?
One big decision: Whether to join an existing firm or go solo. Former UBS veteran Leventhal joined HighTower after considering -- and rejecting -- the idea of starting his own firm from scratch. "I had an existing team; I knew I had enough people with the group I was bringing that we could operate on our own," he says. "There were things that I knew I didn't want to get into day to day" -- signing property leases, dealing with IT, etc. "But I also wanted to get involved as an owner."
Yoshida, who had developed a niche serving retiring workers from one of the big oil and gas companies, said he sought out an RIA firm. "My clients are all blue collar, so simplicity rules with them," said Yoshida. "They're well qualified clients but they don't feel or act that way."
A former Merrill Lynch broker, Yoshida said his new firm is a RIA firm with no B-D affiliation: "I liked the simplicity. It was easy for me to explain to my clients." In the end, all but one of his clients made the transfer with him, he said.
Questions to Ask
But back to health care: Not all independent firms will offer health care benefits that match the high-end coverage at the wirehouses, Yoshida said; he encouraged so-called breakaway brokers to discuss coverage with potential new firms. (Yoshida said his new firm wound up covering a large chunk of the cost of his COBRA coverage.)
If you're recruiting new advisors, you should also be prepared to answer a few other questions beyond compensation and benefits: How much support will you provide? What's your investment philosophy? What do you offer clients? What's your ownership structure? Who owns client data?
That last question was critical for Leventhal: "It was very clear that the clients I brought would forever be mine," he said.