Ask Brad: What is a “Hybrid” RIA?

This is the latest installment of a regular column to answer questions from advisors who are considering transitioning to an RIA model. To see Brad’s previous articles, click here. To submit your question, please email Brad here.

Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.

Ask 10 people in the advisory profession what a “hybrid” is and you will get 10 different answers.

What exactly then is a “hybrid,” not to mention a “hybrid RIA”?

There is consensus that to be hybrid means to be operating under both a broker/dealer as well as an RIA.

That is where the harmony ends.

After all, if that is the definition, isn’t almost every “advisor” already under a hybrid structure?

Wirehouse advisors are generally registered representatives of their firm’s broker/dealer, while also being investment advisor representatives (IARs) of the firm’s accompanying “corporate” RIA.

It is no different with independent broker/dealer advisors. I’ve even seen some such firms tout a “hybrid” model, which in effect did not differ from their traditional indie-BD affiliation model, albeit with an altered payout structure. This magically transforming it into a “hybrid” solution, at least in self-declared name.