Difference Between A Super-OSJ And An RIA?
Super-OSJ or RIA?
Let’s start with what is an OSJ?
Let alone, what makes an OSJ “Super?”
And then how does it compare to an RIA?
If you are considering joining either, it is important to understand the distinct regulatory and competitive differences between them.
In this episode of the Transition To RIA question & answer series I explain how these two models differ, and why you might choose one over the other for your practice.
Come take a look!
I'm Brad Wales with Transition To RIA (TransitionToRIA.com). This is episode #102 of my question and answer series where I answer RIA related questions I get from advisors just like you.
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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🔹 Transcription of video:
What is the difference between a Super-OSJ and an RIA? That is today's question on the Transition To RIA question and answer series. It is episode #102.
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 your practice 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 model.
Again, TransitionToRIA.com.
On today's episode, we're going to talk about what is the difference between a so-called “Super-OSJ” and an “RIA.” In the context of, if you were to join one, how do they differ? Why you might join one over the other.
We’ll start with some definitions.
This verbiage also applies to the employee W2 model, but a Super-OSJ is typically thought of in the independent broker-dealer model. So, something to keep in mind, we’re primarily talking about independent broker-dealers here.
For starters, what is an OSJ?
It stands for Office of Supervisory Jurisdiction. It is a FINRA term, that basically says, "Broker-dealers, if you're going to have your brokers out in the field, you need to have supervision over those individuals."
Who oversees the supervision of a broker is an Office of Supervisory Jurisdiction. OSJ is the terminology that's used for that. That's why at an OSJ you typically have someone with a principal’s license, either the 9/10 or the 24. They are acting as the principal of the OSJ of that broker-dealer.
Depending on how a broker-dealer is set up, and depending on how big it is, they literally could have thousands of OSJs across the country. Each of them being defined from a FINRA perspective as an Office of Supervisory Jurisdiction.
Now, many of these same brokers in these offices are also under the broker-dealers corporate RIA. I've done episodes on that as well, where they can offer their clients both commission account solutions and fee-based solutions. The OSJ terminology applies to the broker-dealer, commission side of things.
The question then is, when does it go from an OSJ to a Super-OSJ?
There's no regulatory definition of what a so-called Super-OSJ is. Long ago some OSJs, as I just defined them, slowly started growing. They might have been two advisors originally, where one of them had a principal license.
Then at some point, they added another advisor. And then another advisor. And then they realized, "We're growing this thing. Maybe we can attract advisors into this." Suddenly, you have OSJs that went from maybe a small, handful of advisors initially, and have now grown to dozens, and in some cases hundreds of brokers under their OSJ.
Now, that doesn't necessarily mean they are all physically in that same location. But they are falling under the supervision, from a broker-dealer standpoint, of that OSJ. Con't....
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