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.
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Go on a job interview at least once per year.
No matter how happy you are at your job. No matter how happy you are with your compensation. Without fail, go on at least one interview a year.
I recall reading that advice once in an article. I do not recall the author, so, unfortunately, I cannot give proper attribution. But the advice is brilliant.
Let me explain.
While this writer was espousing at least one interview a year at a minimum, the message behind it was impactful.
He argued that how can you know if what you have now as a job is as good as you think it is? How can you know that what you’re being paid is as good as you think it is?
How do you recognize if you’ve become inadvertently complacent and are no longer realizing that better paths are perhaps available to you?
Maybe after only one year into a new job, the world has yet to shift in a tectonic way. But what about after two years? Five? Ten?
At some point, your familiarity with your alternative options has become stale. There’s no proverbial flag that gets magically run up the flagpole to let you know.
His solution? Even if you are satisfied in your job, at least once a year go on an interview to see what else is available.
What can financial advisors learn from this?
Many advisors have been with the same firm, or affiliation model, for a long time – sometimes over 20 years.
Many say they are generally satisfied with their current arrangement – some quite vocally so.
However, how does that advisor know that what they have is still best for them? Have they gone on an interview in the past year? Let alone past 20 years?
The world changes. Firms change. Affiliation models change. Regulations change. To assume that the firm or model that was the best fit for you, however many years ago when you first joined it, does not guarantee it still is.
Perhaps it is, but how would you know?
Hence the idea of going on, hypothetically at least, the annual interview.
I help advisors better understand the RIA model: why they might want to consider transitioning their practice, and how to do so if it proves to fit.
I frequently encourage advisors to at least look at what it is all about.
Most advisors not already in the model don’t fully understand how it works, the benefits and responsibilities and what options are available.
As I frequently remind them, though, why would they?
If you’ve only ever been in a different affiliation model or with non-RIA firms your whole career, there’s no reason you would have that knowledge. You haven’t been exposed enough to it.
If anything, you’ve probably been subjected to incorrect information being passed along by people (*cough, your branch manager*) who don’t want you considering it in the first place.
What can you do?
I’m not suggesting you need to explore other affiliation models or other firms annually. While that advice is good in theory, on a practical level, it’s not realistic.
However, when was the last time you looked over the fence? Is it possible that things could be better in a different environment?
The RIA model is not for everyone.
While there is generally significantly better economics and flexibility with an RIA approach, the model also comes with additional responsibilities you may not have.
Do the pros outweigh the cons? For many advisors, the answer is yes. For some, it is not the case.
I can’t declare in this article that it’s necessarily for you. Why? Because every advisor is different. The types of clients you have. The investment solutions you utilize. How you want to market your practice. What your cost structure is. What your vision is for your practice going forward.
These are but a few variables that need to be considered before you can determine if the RIA model is a better fit for you or not.
What I can tell you is this. Look at industry statistics as to where advisors are migrating their practices. Or, ask a multi-channel firm where most of their advisors transition to internally.
I worked at such a firm, and I would tell you that the river only runs in one direction.
There is a reason advisors are increasingly moving to the RIA model.
That doesn’t guarantee it’s a fit for you, but it does validate that it’s worth your time to look.
If you have an adult child of working age that’s been in the same job for five or maybe 10+ years, and they come to you asking for career advice, would you tell them it’s never worth keeping their eyes open to other career opportunities that might exist for them? Should they simply assume their current position will forever be the best path for them?
Before you give them your answer, make sure you don’t need to give yourself the same advice.
Making a change isn’t always the best decision, but it is always worth at least considering.
Brad Wales is the founder of Transition To RIA, a consulting firm uniquely focused on helping established financial advisors understand everything there is to know about WHY and HOW to transition their practice to the RIA model. Brad utilizes his nearly 20 years of industry experience, including direct RIA related roles in compliance, finance and business development to provide independent advice regarding how advisors can benefit from the advantages of the RIA model.
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