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Launching your own registered investment advisor (RIA) is an exciting process that involves clear planning and decision-making. With AdvisorLaw’s specialized registration package, we recommend planning for a 60-to-90-day timeframe to transition your RIA concept into a fully operational business. Before you engage our firm for registration and ongoing compliance, it's important to have a clear understanding of several key considerations for getting a smooth start.
1) Get Licensed.
Before you start advising clients, secure the necessary qualifications. This typically means obtaining a Series 65 license, which allows you to operate as an investment advisor. Additionally, other certifications, such as the Certified Financial Planner™ (CFP®) designation, may make you eligible for a Series 65 waiver. These credentials demonstrate your commitment to adhering to financial planning standards and ethical practices.
2) Choose your main office location and home state.
Your choice of office location and home state will influence regulatory and tax implications, as well as your operational logistics. Consider factors such as the state's regulatory environment, economic stability, proximity to potential clients, and overall business costs. This decision will significantly impact your firm's compliance obligations and growth potential.
3) Identify your brand, logo, and business name.
Your brand identity is crucial, as it communicates your firm’s values and differentiators. Choose a business name that reflects your mission and is easy to remember. Design a professional logo that aligns with the image you want to project. Make sure that your domain names and social media handles are available to maintain consistency across your digital presence, which will aid in marketing and client recognition.
4) Decide which types of products and services to provide.
Determine the scope of your offerings, based on your expertise and client needs. This could include financial planning, investment management, and potentially insurance products — if they align with your client strategies. Each service addresses different aspects of financial health and wealth management, allowing you to cater to a broad or specific client base.
5) Determine what types of fees you want to change.
Your fee structure is a critical element of your business model. You might opt for a wrap fee, fixed fee, or hourly charges. Review the ADVs of other advisors in your area to gauge which fee structures are competitive and fair. Your pricing should reflect the value you provide while remaining attractive and accessible to your target clients.
6) Decide who your clients will be.
Identify your target clientele. You might focus on high-net-worth individuals (HNW), trusts, or charitable organizations. Each client type has unique needs and financial goals, and recognizing them will help you to tailor your services and marketing strategies effectively.
7) Set a minimum account value or size of the client.
Setting a minimum account value can help streamline your client base to those whose needs best match your services. This threshold should reflect your firm’s capabilities and the complexity of the services you offer.
8) Decide which custodian(s) you want to use.
Choosing the right custodian is crucial, as they will hold and safeguard your client's assets. Factors to consider include technological compatibility, support services, fee structures, and the custodian's reputation. A good custodian can enhance your firm’s operational efficiency and client satisfaction.
9) Secure business accounts, credit cards, and E&O insurance.
Set up business banking accounts and credit facilities to manage your firm’s finances effectively. Additionally, securing errors and omissions (E&O) insurance is essential to protecting against potential liabilities and ensuring business continuity. This step is integral to safeguarding your operations and financial stability.
10) Begin vetting tech solutions.
Identify and evaluate potential providers for essential technology solutions, including customer relationship management (CRM) systems, financial planning software, secure document storage, communication archiving tools, and accounting software. These technologies will support your business operations, enhance client service, and facilitate compliance with regulatory requirements.
By following these steps, you'll lay a solid foundation for your RIA — streamlining the process to launch your firm quickly and efficiently. Each aspect, from your branding to your tech setup, is crucial in shaping your firm's productivity and success so that you’re equipped to offer the exceptional service for which your firm will become known.