If you are a registered investment advisor (RIA), whether working as an individual or a firm, for a client(s), you have several duties to observe, which were included in your contract. Besides, the companies significantly benefit from working with you. Thus, it may not be easy to leave one.
However, a few tips can help you avoid costly mistakes. The following are three things to consider when breaking away from your current RIA firm.
1. Determine the best option
When you leave a large firm as a financial advisor, you can form your own RIA firm, especially if you had gathered enough assets while working with your current company. Conversely, you can opt for a turn-key business model, in which case you may outsource some functions from a third party while you handle the business’s RIA services.
It may be challenging to determine your best option. Thus, it will help to get legal and financial guidance as soon as possible.
2. Understand why you want to break away
Financial advisors choose to break away from their existing RIAs for different reasons. You should understand your motive, as it’s crucial for your next move. For example, if you want to start your practice because you don’t appreciate how the current firm handles clients, you should develop new ways of doing this in your company and so on.
3. Spread the word to potential clients carefully
Financial advisory requires relationships: You need clients (firms or individuals). Thus, it will be best to spread the word that you will be independent. However, be careful when doing this. You don’t want to breach your non-compete agreement.
Breaking away is an exciting yet challenging period for financial advisors. It will help to understand your plan as you make informed decisions.