There are key differences between hybrid advisors and dually registered advisors -- but even some industry veterans don't seem to understand it.

"Actually I don’t know the difference," says Dana Anspach, a financial planner and author of Control Your Retirement Destiny, based in Scottdale, Ariz. "If heard 'dual' or 'hybrid' I would assume they meant the same thing -- that the person was both FINRA-registered and SEC- or state-registered as an RIA. If there is some technical difference I don’t know what it is!"

She's not the only one who's confused. “I really don’t know!" emails George Papadopoulos, a Detroit only planner. "I have been a fee-only RIA since day one. This dual hybrid [stuff] has always been confusing to me.”

But when I tweeted out the question late last week, I got one very clear explanation -- from the usually reticent tweeter Mark Tibergien, CEO of Pershing Advisor Solutions.

He quickly explained:

A dually registered advisor is a registered rep with a broker dealer (series 7) who also has a series 65 license.

Series 65 is also known as an investment advisor representative and leverages the broker dealers corporate RIA.

A hybrid is a series 7 and has his own RIA registered with the SEC or state. RIA assets could be custodied at the bd or independent custodial

He later wrote: “I meant to add that dually registered is 100% FINRA licensed and BD supervised vs hybrid model which is split.”


The question is particularly relevant to advisors working within the framework of a broker-dealer.

Tibergien says 20% of a typical broker-dealer's assets are advisory in nature, although Financial Planning's FP50 issue found some B-Ds with a much higher percentage of fee-based revenue. (Commonwealth Financial Network was 52.6% fee-based, Cambridge Investment Research had a 50/50 split, and another seven B-Ds were in the 40%-49% range.)

“As the largest broker-dealer clearing firm in the country, we are seeing assets managed within the firms' corporate RIA grow the fastest," Tibergien adds. "Pershing Advisor Solutions is also seeing a material increase in the number of advisors -- particularly the breakaways -- adopting a hybrid model."

According to Ned Van Riper, founder and managing partner of advisor recruiting firm Join A Firm, "dual" and hybrid" are often used interchangeably in general conversation, but there are subtle differences that advisors should be aware of.

Here's the breakdown:

A hybrid advisor:

  • has a license to sell a product (typically a Series 7) and a license to give advice like financial planning (Series 65) depending on their state
  • has his/her own state- or SEC-registered RIA, outside of a broker-dealer
  • has flexibility to choose/use multiple custodians
  • may have to source own additional services -- such as tech, compliance, billing and reporting -- for the outside RIA.

A dually registered advisor:

  • has a license to sell an investment product (Series 7) but also has an established advisory practice affiliated with a broker-dealer and using the broker-dealer’s corporate RIA
  • is also known as an Investment Advisor Representative
  • runs the business more simply through one organization.

One key question for advisors, Van Riper says, is which type is more profitable for their practices. He argues that the hybrid model is ultimately more profitable for a larger advisor/RIA team that has $100 million or more in assets under management, assuming they have control of their local overhead costs and a broker-dealer that takes only a small slice of their outside RIA business. Smaller advisors may be better off within the dually registered model, he says.
The bottom line: Use the term “hybrid advisor” when referring to advisors having their own RIA and affiliated with a broker-dealer. Use the term “dually registered advisor” when referring to an advisor affiliated with a broker-dealer and registered as an investment advisor representative under a broker-dealer’s corporate RIA.

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