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This is the Transition To RIA Vendor Profile Series where we take a look at the solution providers powering the RIA model. On this episode:
Vendor name:
RIA Circle
Vendor category:
Practice Management
Episode host:
Brad Wales
Episode guest:
Carolyn Armitage
Vendor contact info:
Full Transcript:
Brad Wales – Hi, I’m Brad Wales with Transition To RIA and this is the Transition To RIA Vendor Profile Series where we take a look at the solution providers powering the RIA model. On today’s episode we’re answering the question, “What is RIA Circle?” To help us with that is Carolyn Armitage. Carolyn, thank you for coming on.
Carolyn Armitage – Thank you, Brad. I’m happy to be here.
Brad – Not to put a spoiler on it, I’ll let Carolyn kind of explain what RIA Circle is and then we’ll get into details. I think this is a really cool thing, definitely needed out in the marketplace. Part of the reason I say that is a comment I often hear from advisors that are considering the RIA model, considering an RIA path or any independent path for that matter, they feel that after I make that move, I’ll be “out on an island” is sometimes the term that’s used and I’ll be isolated.
I won’t have colleagues literally, you know. If I’m in a big W2 broker-dealer branch now, I have colleagues I can walk down the hall and talk to. How can I have that collaboration with my professional colleagues, whether it’s business-building conversations or just being there for each other’s entrepreneurs kind of thing.
The question is how best do you solve for that? There are solutions for that. So not to steal your thunder, Carolyn, but as a little setup of why I’m a big fan of this, if you could start by kind of telling us at a high level, what is RIA Circle?
Carolyn – Yeah, thank you, Brad. That is exactly why I started RIA Circle, because as I’ve seen this trend over decades of advisors moving from an exclusive broker-dealer model into starting their own RIA and perhaps a hybrid in between that when they leave that broker-dealer environment, it can be a little bit lonely.
You’re an island as an RIA. And even as a hybrid advisor or an IAR of a big broker-dealer organization, you tend to get siloed by what messaging that firm wants to provide to you. Whether it’s a broker-dealer, whether it’s the hybrid RIA and you’re an IAR of the RIA, or you go to the custodian meetings that they hold annually or perhaps regionally, they’re messaging you what they want you to hear and know.
This group cuts across all of those silos. So all custodians are welcome. All broker-dealer groups are welcome as long as you’re an IAR or advisor, financial advisor for the industry. It’s a way for advisors to learn from each other. Then I also provide not only my guidance, which I do wealth management consulting, I do hold a once a month group for all advisors.
For example, yesterday we had an all-advisor member meeting and we went deep on a discussion for one advisor who joined the RIA circle because he’s looking for a succession plan. He has a junior advisor in his office. He doesn’t have the wherewithal to buy the business or the business acumen to kind of carry it forward, so he was looking for a successor.
So we were talking deep about his experience in going through that process, that he hasn’t quite found the right one yet. He’s looking to connect with that right advisor.
We talked deep on M&A and valuation work and what multiples are out there. We talked about compensation and equity sharing. We had a great discussion on technology tools, particularly the AI tools out there. We had a great discussion on the tax software that’s available and what folks are using, CRMs, we talked about growth strategies, both inorganic, as I mentioned with the M&A, as well as organic growth, and then the people issues that they’re facing, right? Like when should I share equity? What do I do about this specific issue?
It’s just a great way to share information and learning with each other, as well as have some camaraderie from people who completely understand what you’re going through on a day-to-day basis.
Brad – Yeah, I think I’ve experienced that in the prior part of my life having worked in a big corporation kind of role and then eventually become an entrepreneur. Sometimes until you’ve been an entrepreneur yourself and you look at business owners in whatever industry and you might kind of think, oh, they’ve got this all figured out. The reality is, no, there’s always things to be figured out as a business owner.
Like you said, it could be issues with employees or changes to rules or regulations and how are we going to adapt to that. So no matter how long someone’s been in business, in this case in our industry, there’s still those things that we’re all out there trying to figure out and so it can help to talk to your peers and learn from them and brainstorm and whatnot.
What exactly happens if someone becomes part of RIA Circle, are they teamed up with certain members and then they meet on some sort of periodic basis or is it the larger group on a more routine basis or how is it set up if you will?
Carolyn – Yeah, thank you. I would say there’s four different types of learning. So one, kind of the main foundation was a small group monthly meeting with peers. I guess it’s important to note, enrollment is open all year long. It’s not like there’s a finite period where you can join. But since I started the company and launched it a couple of years ago in September, that’s where the natural re-ups happen. So in October, I re-stack the groups.
While the platform that I use has AI tools and could sort those advisors, I don’t use it. I’ve been exclusively in the wealth management industry my entire career, which spans over three decades. I started as a financial advisor in this industry and I really know them deeply. I have a conversation with every advisor that joins and I put them in the group that I think is ideal for them and what their learning objectives are. So once a month they meet generally for an hour, sometimes longer, and they meet with that group.
Then in addition to that, we have an all-advisor group meeting, which is optional. It’s not mandatory, but it’s optional. I do participate in that one. Some of the other groups I participate in, it’s up to the circle captain, who is a very thoughtful, caring, advanced financial advisor in our industry. I call them circle captains and they run those group meetings. They schedule the meetings. They are the facilitator of each monthly session for their group one. I’m the facilitator for the all-group one and we’ll go through a variety of topics and certainly notes are available for those that can’t attend live.
Then in addition to those two learning opportunities, I invite centers of influence and experts in our industry for ancillary services that can help serve clients. Those folks present live to the group as well as it’s recorded. Then those recordings are uploaded to the platform. All their materials that they use, actual video recording, as well as the executive summary, so that if somebody joins next year, they are able to go back the last few years and also view those recordings.
Then the fourth way would be through the library or resource center where there’s lots of tools, educational elements, there’s news clippings, where they can find something that they’re looking to learn more about.
Brad – Thank you for breaking that down. In the monthly meetings, the leader of each circle that comes in to kind of lead it, typically any given month do they come in with a specific, hey, here’s an item we’re going to talk about and then we might open it up to the floor to other things. Or is it, we just open it up to the floor right from the get-go and kind of learn who wants to talk about what, or what does the structure of those typically look like?
Carolyn – Yeah, it’s a great question. When I first started the organization, I had a more rigid system where it was a very specific agenda. There were pre-meeting reading materials so that you could have the right preface for the topic. That’s what the group was to talk about. What I learned in the experience is that that is fine and that’s a good backup agenda.
However, folks really want to talk about what’s more topical, which will often be personnel issues. Sometimes it’s market-driven, right? It might be deep discussions on look at how big gold has done. Should I invest more in that? What about alts? What are you using? How’s your experience with tools and things like that? So I found that each of the groups kind of prefer to talk about what is more immediate for them than a more generic topic.
Brad – Yeah, okay. So it’s fluid as things evolve with the industry and so what I obviously assume the goal here is is to provide as much value within these groups as possible and from that learning environment. So I guess kind of two things: you briefly alluded to it, are there minimum requirements to be part of this? So obviously they’re financial advisors, but is there size or experience or anything like that? And then regardless of what the minimums are, how do you typically try to group folks up that might provide that best kind of learning?
Carolyn -Yeah, great question. So we have groups that are, or advisors I should say, that have books of business, maybe $30 million in assets to firms with tens of billions of dollars. So some of the mega firms are part of the group and everything in between. There are advisors that are part of a broker-dealer network and they’re an IAR and they also offer insurance business to exclusively fee-only advisors. That’s why I’m very particular in putting the advisor into the right group and not letting some AI tool do that for me. If there’s a point where we have 10,000 advisors, okay, I’m not going to be able to do that myself. Right now it’s still manageable and I’m able to sort them.
So for example, one of our points of evolution has been to have fee-only groups as opposed to hybrid groups. In the beginning, I combined advisors sometimes based on just scale alone, because $10 billion shops have similar-type issues that a $15 or $20 billion shop does, or smaller AUM advisors will have similar growth issues that they’re dealing with. So it’s being nuanced as we evolve.
Occasionally, once each year I’ve had an advisor say, “I don’t like my group. Can I have another one?” What I found is sometimes people have a competing interest with somebody in their group, such as if they’re with a large broker-dealer and they’re looking to leave, they don’t want somebody else from the broker-dealer to know about that, right? So I moved one gentleman to a different group because he was looking to leave completely. But that makes a lot of sense.
I did have one other individual that had a personality conflict with somebody. It’s like, great, we’ve got other groups, I’ll put you into the right group. So very intentionally, it’s a very fluid environment to make sure the advisor is getting the best experience for them and their needs.
Brad – How do you encourage folks, I think there’s some folks that would listen to all that and be like, wow, that’s my type of thing. They’re type A and they want to get in there and be the extrovert they are and all that. But there’s some advisors that might be, I don’t know if intimidated is the right word, but wow, I’m getting in there. They’re just more introverted.
How would you kind of encourage those folks to say, hey, it’s okay to be part of the group. You’re not going to be in there. You’re not going to be called on on the first day and have to stand up and give some presentation, that it is a process that you can be actively involved in regardless of how introverted you are or not kind of thing.
Carolyn – Yeah, it’s a great perspective. That’s why the circle captains that I chose were chosen very explicitly for their human relations skills, their leadership, both within their firms and the organization. Everybody has a clean compliance record. I keep the groups small intentionally so that there’s not a lot of room to hide. Right. If you have six people and you only have an hour, each person may speak for 10 minutes at most.
It’s also less intimidating when you have a small group versus a large group. That’s where the circle captain is the one to help facilitate the conversations and make it comfortable for everybody. For example, each session starts out with an icebreaker. They may not know each other in the beginning, and it’s important to build up that trust. So I’ve designed a whole sheet of different icebreakers that they can start with to get to know each other, get to trust each other.
That brings up another important point because it takes that time to build up trust, even in your peers, even though they’re going through the same things you are, you got to build up that trust. With that, I try to have the groups be as consistent as possible for the full year. That’s why membership is for a full year, not a month-by-month charge.
As I looked at a pilot group before I rolled this out through a dozen key select advisors that I really respected in the industry, they really wanted this to be where advisors are not coming in and out of the group each month. Because when that happens, how do you build trust? It doesn’t just happen in the first month. It takes a couple of months. You need to get to know the person. You need to be able to be comfortable and vulnerable with the people. Right?
As a CEO, it’s very lonely out there. You can’t really complain to your people or ask them what to do necessarily. You’re supposed to be the leader. Right? This is where you can meet with other CEOs and ask them how they would handle a situation. Here’s what I’m going through. We’d love your perspective. We’d love your help.
In my consulting work, one of the elements I work with with my clients is on identifying blind spots. Whether it’s an executive on the team or they themselves, how do you know unless you ask somebody else as to how you’re doing? This is a great group to be able to do that with year after year.
Brad – I think a good kind of flashbacks I had as you were describing that is I’ve been to my fair share of industry conferences over the years. Clearly you have as well. There’s often that big giant general session that has hundreds if not thousands of people in the room and they sometimes would take questions from the audience towards the end or maybe it’s a round table.
I’ve sat in those rooms before and thought probably 90% plus of the people in this room would love to ask a question, but it’s intimidating to stand up at the microphone and am I going to feel stupid or is this going to be a stupid question or whatever the case is. Here’s a group where you can feel comfortable asking those questions. That’s an analogy that kind of came to mind that I think shows a lot of the value of that small group setting.
You kind of alluded to a little bit, so I want to just dive into kind of how something like this is priced out. So it sounds like it’s kind of a one-year membership at a time. Is that kind of an annual fee or month-to-month fee? Or what does that typically look like?
Carolyn – Yeah, thank you. For consistency throughout the year and to be able to build up that trust, I priced it where it’s affordable. It’s around $2,000. It is a once-a-year upfront payment that covers all the learning sessions throughout the year. So it’s an annual membership.
I think it’s important to note for the listeners that this is completely self-funded by me. This is an altruistic platform that I pay for which I don’t take a dime in sponsorship, no private equity firms backing this. I felt that was important because of what we’re discussing, right? In those large room sessions, whether you’re at a large custodian conference or a broker-dealer conference, or perhaps even a large RIA, it may not be a safe place to ask certain questions.
Certainly, if you’re at a broker-dealer and you’re exploring moving to another broker-dealer, you can’t ask your peers those questions. They may rat you out. It’s just the reality of it.
I have led large groups at broker-dealers, at independent RIAs, and it is a contained environment very intentionally. This breaks down all those barriers and makes it safe. So whether you’re leaving a wirehouse or a broker-dealer or RIA, or you’re just looking to grow and expand and have some learning from your peers, it’s a great way to have that environment in a safe, confined space.
Brad – I like it, I don’t want to feel like I’m on an island. For even the folks that are at maybe those larger firms that still want that smaller peer group to be able to bounce ideas off of, there’s certainly a lot of opportunity and value there as well.
So folks, obviously we’ve only touched this at a high level, but hopefully it’s shown folks that this type of thing does exist and you can be part of this. Maybe they want to learn more about exactly how they get matched up or if it’s a good fit for them. So for folks that do want to learn more, that do want to maybe take a look to see if this might be good for them, what’s the best way for folks to do that?
Carolyn – Yeah, thank you, Brad. I’m happy to have a conversation with anybody who’s interested. Before I accept anybody as a member, I do pull their brokercheck, look at their background, see their compliance component, look them up on LinkedIn, right? I want to know who the person is and ensure they’re a financial advisor. I have turned away many from the industry that want to be part of this to be able to sell to our advisors and that is not what this is about at all.
There are no product pitches. There’s no sales. Even advisors, one of our ground rules is if you have a book or you have some technology tool, you are not to sell that to our other financial advisors. You can mention it in your profile and such, but this is not a sales mechanism. It’s a learning and collaborative tool.
So you can go to riacircle.com and there’s several pages that you can look through there. You can see who the circle captains are. To become a member, you fill out an application where you answer a series of about, I don’t know, 12 to 16 questions. That comes to me, I go through your profile and you either get accepted or I need more information to be able to accept you. Then after you’re accepted, then you pay and then you’re put into the appropriate group. You’re also welcome to look at the page on my consulting site, which is wealthmanagementconsulting.com. I have a page there.
For those that don’t want individual consulting, I offer this group consulting, if you will, right? There you get to talk about all different types of topics in a more affordable fashion than independent consulting oftentimes is. On LinkedIn, I’ve got a page for Wealth Management Consulting. I’ve got a page for RIA Circle and then my personal page of parallel analytics.
Brad – Perfect. I will make sure all of those are in the show notes and the main topic, riacircle.com. I’ll repeat that as well.
I commend you for holding the line. I implore you to always hold the line on who you allow in. I think you will kill the golden goose if you ever get greedy and let those folks in that just start making it into a sales pitch. I think that would be the end of it. It sounds like you realize that and have no intention of doing that. So I applaud you for that.
Brad – With that, Carolyn, thank you for coming on. It was just high level, but I think it gives folks a good idea of what this sort of resource looks like. Hopefully they’ll reach out to learn more. So Carolyn, thanks for coming on.
Carolyn – My pleasure, Brad. Thank you so much for having me.
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