Why Go RIA When Wirehouses Offer Huge Upfront Checks?
I'm Brad Wales with Transition To RIA (TransitionToRIA.com). This is episode #94 of my question and answer series where I answer RIA related questions I get from advisors just like you.
There are many participants in our industry who run around gleefully messaging the big upfront bonus checks wirehouses are known to write.
Have you ever considered why that is their opening line?
As they say in Texas, are they “big hat, no cattle?”
Before considering taking a big upfront check for joining a firm, it is important to understand the trade-offs you’re forced to take in return.
In this episode of the Transition To RIA question & answer series I explain what those trade-offs are, and how it compares to pursuing an RIA path instead.
Come take a look!
What I do: At Transition To RIA I help financial advisors understand everything there is to know about WHY and HOW to transition their practice to the Registered Investment Advisor (RIA) model.
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🔹 Website: https://TransitionToRIA.com/
🔹 Show notes: https://TransitionToRIA.com/why-go-ri...
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🔹 List of all questions I've answered: https://transitiontoria.com/videos/
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🔹 Whitepaper ("11 Ways The Economics Of The RIA Model Are Superior To Other Advisor Affiliation Options"): https://transitiontoria.com/whitepapers/
🔹 Transcription of video:
Why go RIA when wirehouses offer huge upfront checks? That is today's question on the Transition To RIA question & answer series. It is episode #94.
Hi, I'm Brad Wales with Transition To RIA where I help you understand everything there is to know about why and how to transition to the RIA model.
If you're not already there, head to TransitionToRIA.com where you’ll find all the resources I make available from this entire series in video format, podcast format. I have articles, I have whitepapers. All kinds of things to help you better understand the RIA model.
Again, TransitionToRIA.com.
On today's episode, we're talking about if you're an advisor considering options in the marketplace and you're thinking, "Maybe I should go down this RIA path, I should learn more about it, maybe that's the right fit for me. But there are wirehouse firms offering huge upfront checks, bonus checks if I join them. Why should I go RIA when wirehouses are throwing this money around?”
What prompted me to make this episode - and this is nothing new, I just happened to see a few of them recently - is you see a lot of firms leading with that message. Whether it is wirehouses trying to attract advisors and they're touting all these big checks, or industry participants that help advisors try to find a wirehouse and that's their lead-in line, “Are you aware of the big checks being offered?"
That is a lazy approach. That's not helping advisors understand how different options compare, what different models look like, how the economics work, or anything like that. That's just a lazy way to basically say, "Look at this big shiny object, and look how great this is."
That must be considered, but it's only one of the variables involved. Particularly when considering total economics, it's just one variable. So, I think it's a very lazy approach that a lot of industry participants use to try to get advisors' interest or to peak a conversation.
It's been going on for a long time, but I happened to see some examples recently that prompted me to make this episode to clarify some of the differences between what happens when you take that check and how that would compare if you had gone down the RIA path instead.
For starters, just a quick little clarification. There are multiple different ways to transition your practice into the RIA model. One of those paths is to join an existing RIA. There are some RIAs that offer upfront, often referred to as, transition assistance or TA if you join them.
So don't have the impression that, "If I go down the RIA path, there's no upfront money." In some cases, there's not. But the economics are such that that's not a bad thing, which we'll get into here in a little bit. But just know that there are some firms that do offer some amount of transition assistance.
But to be clear, even though it can still be a reasonably healthy number, it's nowhere near these large shiny checks that the wirehouse firms like to wave around. But just know that it exists in some cases.
From there, I want to give five observations about the ramifications of taking the large upfront check and how that differs if you had not taken the check and transitioned to RIA instead. Con't....
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