Navigating The Transition From Broker-Dealer To RIA: Podcast With Model FA

Are you a financial advisor considering a shift from the world of broker-dealers to the registered investment advisor (RIA) space? The regulatory landscape can be quite different, and it’s important to understand the nuances and challenges that come with this transition. In a recent podcast, AdvisorLaw Vice President of RIA Operations, Michelle Atlas-Quinn, J.D., shared valuable insights on what advisors should consider when making this change.

Meet Michelle Atlas-Quinn, J.D.

Before delving into the podcast’s key takeaways, let’s introduce Michelle Atlas-Quinn, the expert who provided these insights. Michelle has an extensive background in the financial industry, with over 20 years of experience. She currently leads the RIA division at AdvisorLaw. Her journey into this field took an unconventional path, involving time spent abroad in Japan and Australia, followed by a transition into the world of financial services. Michelle’s unique background and extensive industry experience make her a credible source for understanding the intricacies of RIA operations.

Podcast Highlights

Hosted by David DeCelle, President of Model FA, this podcast delves into the transition from broker-dealer to RIA. It offers crucial insights for advisors contemplating this change. Michelle provides valuable information and guidance to assist those navigating the transition.

One of the primary distinctions highlighted in the podcast is the difference in regulatory focus between broker-dealers and RIAs. Broker-dealers often adhere to strict rules and regulations, while RIAs operate under a broader principle of acting in the client’s best interest. This difference places a greater emphasis on the duty of care and loyalty in the RIA space, aligning more with the client’s best interests than with rigid rules and timelines.

Key Takeaways

Here are some key insights from the podcast that advisors should consider when transitioning to the RIA space:

• Understanding The RIA Space: RIAs provide advisory services, often managing client assets through third-party managers or model portfolios. This approach leads to a fee-based structure, which differs significantly from the commission-based structure of broker-dealers.
• Client’s Best Interest: The RIA framework revolves around a fiduciary duty. This guiding principle replaces rigid, rule-based compliance, making it crucial for advisors to make decisions that align with their client’s needs.
• Transition Challenges: Advisors moving from a broker-dealer background may encounter challenges related to products like variable annuities and 529 plans. They must assess which products to keep, sell, or transition to fee-based structures, all while keeping their client’s best interests as their priority.
• Compliance & Regulation: The transition to RIA also involves dealing with compliance issues. Advisors should be prepared for an evolving regulatory landscape. Compliance requirements may vary according to state regulations and the SEC (U.S. Securities and Exchange Commission) for larger RIA firms. While the regulatory burden may be lighter in some aspects, understanding and adapting to new compliance frameworks is essential.
• Marketing Opportunities: The podcast also sheds light on how the marketing landscape is changing for RIAs. Recent regulatory changes allow for more flexibility in marketing practices. Advisors can leverage this to their advantage, engaging with clients and generating reviews on platforms like Google and LinkedIn.
• Cybersecurity: Advisors should place a strong emphasis on cybersecurity, as it is a growing concern in the industry. Understanding and implementing cybersecurity measures is crucial to protect both client data and your practice.
• Customized Compliance Support: AdvisorLaw offers tailored compliance support to help advisors successfully navigate the transition to the RIA space. Whether it’s reviewing contracts, understanding non-compete or non-solicit clauses, or creating compliant marketing materials, AdvisorLaw’s services are designed to provide the right level of assistance.

Transitioning to the RIA space offers newfound independence and marketing opportunities for financial advisors. While it may seem daunting, partnering with experts like AdvisorLaw can help make the process smoother and more compliant. The combination of understanding regulatory changes, adapting to a duty-based rather than rule-based approach, and embracing modern marketing practices can help advisors thrive in their new RIA roles.

Learn more about our RIA Registration and Setup services as well as our comprehensive Ongoing Compliance and Outsourced Chief Compliance services.

If you’re considering a move to the RIA space or just want to learn more about how AdvisorLaw can assist you through your transition into an RIA, contact us using the form below for a one-on-one consultation.