Ask Brad: What Should RIAs Outsource?

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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If you transition your practice to the RIA model, it is not a matter of whether you will outsource, but how much.

At its most basic form, transitioning your practice to the RIA model is an exercise in identifying the services provided to you by your broker-dealer affiliation and determining how best to replicate them on your own – ideally, at a lower cost and with more flexibility.

Those services might include office space, technology, E&O insurance, etc.

If you are at a traditional broker/dealer, you are outsourcing those functions. Your firm provides them to you, albeit with an expensive price tag and limited flexibility.

In the RIA model, you will need most of the same support services. It’s a matter of how and where you will delegate those services.