RIA Family of Companies

Six Common Business Models for Advisors in 2018

Six Common Business Models for Advisors in 2018

By Cory Roberson, Principal at RIA Review and RIA Consults
Considering opening an RIA Business for the new year?

For entrepreneurs who want to get started in the new year, we’ve put together a list six common firm business models based on our work with more than 160 advisors across the U.S. and Europe.  The following is for illustrative purposes and is by no means an exhaustive list of the business models that exist in the industry. 
Advisors may conduct business with a combination of the services listed below.

#1 - RIA Firm + Portfolio Management  
Firm Level
Rep Level
Services
Registered Investment Advisor
Investment Advisor Representative
Portfolio Management

#2 - RIA Firm + Financial Planning + Insurance
  
Firm Level
Rep Level
Services
Registered Investment Advisor
Investment Advisor Representative
Financial Planning

Insurance

#3 - RIA Firm + Portfolio Management + Financial Planning/Consulting + Third Party Consulting
  
Firm Level
Rep Level
Services
Registered Investment Advisor
Investment Advisor Representative
Portfolio Management
Financial Planning/Consulting
Third-Party/Assets Under Advisement

#4 - RIA Firm + Portfolio Management + Financial Planning/Consulting + 

Registered Rep/broker-dealer  
Firm Level
Rep Level
Services
Registered Investment Advisor
Investment Advisor Representative
Registered Representative
Portfolio Management
Financial Planning/Consulting
Securities products/Broker-Dealer

#5 - RIA Firm + Portfolio Management + Private Fund
Firm Level
Rep Level
Services
Registered Investment Advisor
Investment Advisor Representative
Securities Agent (some states required if issuing securities/PPM’s)
Portfolio Management
Private Fund

#6 - RIA Firm + Portfolio Management + Mutual Fund
Firm Level
Rep Level
Services
Registered Investment Advisor
Investment Advisor Representative
Portfolio Management
Mutual Fund
Overview of Services*
Portfolio Management** typically involves investment supervisory services (e.g. directing portfolio investments, holding assets under management).  These can also include: Robo-Advisory and retirement planning management services.  
Third-Party Portfolio management (“Assets under advisement”) is a form portfolio management service.  This service is usually structured in a consulting, flat or shared fee arrangement with another investment firm, fund, insurance company, and/or retirement plan provider.
Financial Planning/Consulting typically involves hourly planning and/or investment consulting packages for clients (e.g. life, career, financial, college, emergency planning). This service can include plans for retail clients, retirement planning for a pension plan or third party services for a retirement plan provider.
Registered Reps/Commissions typically offer securities products for a commission through a FINRA or other SRO-registered entity. This means that the advisor is in a commission relationship with an affiliated or non-affiliated broker-dealer/securities issuer. 
Mutual Funds (“investment companies”) involves regulated investment vehicles sold to the general public (open or closed end funds).
Private Funds involves investment (“pooled”) vehicles that are sold to either accredited or sophisticated investors (Reg. D).  These funds typically rely on two Investment Company Act fund exemptions, 3(C)–1 or 3(C)–7 to avoid the same reporting burdens as mutual funds.  Investments can include:  real estate, stocks, venture capital, blockchain, and cryptocurrency. 

**Sample Quarterly Fee billing schedule (portfolio management/supervisory services)


Market Value ($)
Quarterly Calculation of Fees
Annual Fee Schedule (%)
Total Fees
1,500,000
$250,000 X .004875

1.95

$1218.75

$250,000 * .0035

1.40

$875

$500,000 X .0025
1.00

$1250

$500,000 X .00175
.70
$875
Compliance Reporting Maps
Based on your firm’s model, we encourage firms to create their own reporting map for compliance purposes.  We believe that the process of breaking down reporting levels can make your firm’s ongoing compliance requirements* a lot easier to bear.
Reporting requirements are based on your firm’s model. These can include:  ADV’s, U-4, Corporate documents, subscription documents, Edgar filings, stress testing (e.g. SAS 70), and/or audited financial statements.
Below, we’ve created a sample reporting map breakdown.
Corporate Level
Firm Level
Rep Level
Securities Level
Fund Level

Corporate Documents

LLC/C-Corp Securities


Registered investment Advisor (RIA)

Investment Advisor Representative (IAR)

Registered Representative (Hybrids)

Securities issuer/agent

Initial Public Offering

Initial coin Offering

Private Placements

Registered Fund (i.e. open/closed end funds

Private Fund (registration or exemption)

Email us at: cory@riareview.com or call us at: 650-305-2688 if you’d like to evaluate your business reporting model or start an RIA.





FinTech’s - Domain library (for sale) includes: amlreview.com, blockdltreview.com, crowdtechreview.com, etheriumaml.com, etheriumcompliance.com, etheriummarkets.com, etheriumsolutions.com, etheriumtrading.com, findmissions.com, insuretechreview.com, litecoinaml.com, litecoinapplications.com, litecoincompliance.com, myaltcoinblog.com, myetheriumblog.com, myicoblog.com, mylitecoinblog.com, paytechreview.com, regtechschool.com, theregtechschool.com, riapackage.com, riacloudspace.com, rufranchising.com, socapschool.com.  Contact me at: Cory@riareview.com or go to https://auctions.godaddy.com/ if interested in purchasing.

Our Mission: “Serving the Investment Community to Make a Social Impact”

Cory Roberson is Principal of RIA Review, a compliance and document management portal (www.riareview.com) - 110+ users and growing.  He is also Principal of RIA Consults -Roberson Consults Group), a consulting firm providing compliance, operations, and business development services for registered investment advisors and next-gen fintech entrepreneurs (www.riaconsults.com) more than 160 SEC & State advisors clients across the US (including a few in Europe).   Through his mission-driven arm, SoCap Missions (http://SoCapmissions.com), he has volunteered in locations such as like S. Korea, China, S. Africa, Thailand, and India.


No comments:

Powered by Blogger.