Financial advisors start independent firms for many reasons. One of the most common is entrepreneurial independence. However, starting an RIA comes with several significant challenges.
New, just formed RIAs with limited or no assets will present several unique challenges. Knowing what these are can help you prepare for what’s to come.
Marketing costs
You must consider the type of client you want to attract and then market your firm to their preferences. You may fail a lot, and this is something to prepare for. However, some platforms are better suited to new RIA companies than others, so keep this in mind.
You can’t compete with established RIAs with deep pockets when you first start. A smart strategy is to choose a specific niche and then create marketing materials directed at that person. When you are new, it’s not a time to be a “generalist.”
The temptation of advanced technology
Technology has come far in the RIA industry. Because of this, you may be tempted to purchase all the latest and innovative tech-forward software options and solutions to support your RIA. However, this may be a wasted investment. Plenty of successful RIAs still use Excel and operate out of their home. Don’t overinvest in technology that will not help you gain new clients.
The need for diverse talent
As a new business owner, you likely want to have a hand in all aspects of your business. However, if your specialty is financial investments, it may be a waste of your time and energy to focus on designing a website. Take time to figure out what you want to handle and then outsource other tasks to professionals.
Getting support for your new RIA venture
As a new financial investor, seeking support in your ventures is a must. It’s also smart to know what legal elements come into play in your new role.