…
Also available as podcast (Episode #125)
Apple | Android | Spotify | Amazon | Audible
How Difficult Is A Transition To The RIA Model?
TL;DR – The most difficult parts of a transition are 1) having to overcome the fear of a pathway you’re likely not yet familiar with (which is solved by educating yourself); 2) while there is a process for how to prioritize the steps involved, there will come a time it is a lot of work all at once; 3) the sprint of moving your clients over post launch.
Found This Video Helpful?
Want to learn even more by better understanding what a transition to the RIA model might look like for your own practice? I encourage you to schedule a Discovery call, and I’d be happy to begin that conversation with you.
Full Transcript:
How difficult is a transition to the RIA model? That is today’s question on the Transition To RIA question and answer series. It is episode #125.
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.
This is episode #125, which is a nice round number. And interestingly enough, up until episode 125, I’ve never had to re-record an episode or start over. I just hit record and go.
But with 125, I already attempted to record this. I did the entire episode. Once I’m done, I check to make sure the video and audio came through. And turns out, the microphone battery died halfway through the episode. So this is now my second attempt at it.
And then to make matters worse, I’m battling a bit of a cough right now. My apologies if my voice is a little froggy and if I must take a quick drink of water every so often.
So go figure, that’s the one that I must re-record. But here we are, I appreciate you tuning in and hopefully this one records successfully.
The topic on this episode is how difficult is it to transition to the RIA model?
That of course is a bit of a hard thing to answer because it’s arguably subjective. But it can be difficult in different ways. I wanted to make an episode on what some of those are and why your fears of that difficulty are perhaps overblown.
Oftentimes, why this process might seem difficult or daunting or overwhelming is because you likely have never done it before. If you’ve been at a wirehouse your entire career, or maybe at an independent broker-dealer, or some combination of those, you’ve never had to transition into the RIA model. And if you’ve never done something before, understandably, there’s a lot you maybe don’t know how it works and that can seem like a difficult task to work through.
But just as you help your clients through something they’ve perhaps never done before – maybe retired and had to roll over their 401K, which is all they’ve ever known in their life and now they need to save and invest in a different way – it’s just a matter of understanding how the process works and how to go through that process.
An analogy to appreciate why it might seem difficult, but it’s doable, is when you buy a house. Particularly the first time in your life that you’ve bought a house.
That process can seem very difficult, but it’s worthwhile doing. There’s a reason you want to buy. Maybe you’ve rented your whole life and now you want to buy. Or perhaps you’ve moved and need to buy a new place.
That process starts with a lot of research. You research neighborhoods, housing types. Do you want a house, do you want a townhome, do you want a condo? How do they differ, how are they priced different, how is the price impacted by the location? On and on, all kinds of research to do.
And then after you get through that research – which can be difficult perhaps if you’ve never done it before – now you must do your due diligence.
Maybe you’ve chosen a house that you like. Now you must do due diligence. You must see it yourself. You must decide what you don’t like, what you like, what you could live with, what you might need to fix. You might need an appraisal for it. You likely need an inspection for it.
Well, guess what? That can all seem a little daunting or difficult because again, if you’ve never done it before… What order does that go in? Who do you hire to do all those things?
You often want to rely on someone to guide you through that process, like a real estate broker who will help you figure all the pieces out. But nonetheless, those are all things you must figure out.
Then as the process proceeds, you get to the date of the closing. You’ve done all this work over perhaps weeks or months. But guess what, you still need to move into the house. Move your furniture. That’s going to be a lot of work. That’s going to be difficult.
But assuming you found a good house, and you’ve done all these steps – which yes is not always fun, it’s a lot of work, it can be difficult – but once it’s done, and particularly as time goes by, the pain and misery of the process is farther in the rear view mirror and you’re happy in your new spot and thankful you took the time to go through all that.
Think about a transition into the RIA model in a similar light.
It’s a lot of steps. It’s a lot of things you need to educate yourself on. You’re going to need to rely on a lot of different partners or professionals to help you with the steps along the way.
Yes, it will be a lot of work. It will be difficult at times. But like buying a house, it’s a finite exercise. It’s additional work only for a period of time.
I can sympathize though because I get it, it’s on top of the regular work you must continue to do on a day-to-day basis as a financial advisor. It’s extra work. But it’s only for a finite period. Once you work through those steps, that tails off, and now you’re over the mountain, you’re on the other side.
But make no mistake, it is a fair amount of work. Which is measured, not in weeks, this is measured in months of how long that hard work will go on for.
So, what does it look like with transitioning your practice and what are the steps that might be difficult?
There are three phases of moving into the RIA model. First is educating yourself.
If you’ve never done it, there’s a lot you don’t know. Understandably, why would you know how certain things work if you’ve never been in the RIA model, if you’ve never made a transition?
Perhaps you’ve only been in one affiliation model your entire career. It can seem difficult that there’s so much to figure out. There’s so much to learn. There’s so many steps to do. And that can seem like a daunting task.
Not to give you a sales pitch, but that’s what I help you with so that it is not difficult. You need good guidance. There are several decisions involved, several variables
That starts with that education layer. And when you take the time to do the education, all of a sudden this seemingly difficult task starts to become more manageable.
You’ll understand it better. You’ll understand what it takes. What the process is.
That’s phase one, and that can go relatively quickly or could be very long, depending on what timeline you’re on and what your capacity is to work through those steps.
I talk a lot on these episodes about how there are multiple ways into the RIA model. You might start an RIA. You might join an RIA. There are some flavors in the middle. And there are all kinds of variations of those three pathways into the model.
But once you chosen your path, you then need to ask… “What do I need to do between now when I’m going to go live with it?”
There’s a methodical process for what steps are needed, how much time is needed, how you should prioritize the steps, what solution providers you should use, etc. Mapping that out is phase two of the process.
From a difficulty standpoint, again, there’s a tried and true method of how to work through that. But from a difficulty standpoint, it will be a lot of work.
The idea is to prioritize this process. It’s not saying… Here are the 10 things you must solve for. Now let’s start working through them simultaneously. That’s not how the process works. It’s what are the highest priority items that will take the longest to work through? We’ll start with them.
Then as time goes by, we’ll check boxes along the way. We’ll add other variables that take less time. There’s a process for it.
But to be clear, and anyone that’s gone through a transition knows, down the stretch, particularly in the final weeks before launch, no matter how well you attempt to plan this out, it starts to add up and there are a lot of balls you’ll be juggling simultaneously, a lot of things that must be addressed.
That can be difficult. But again, it’s a finite time. You just work through the process. But it’s good to know what to expect during the planning stage.
Then the final phase, and I’m simplifying all this, is come launch date, now you must move your clients. That is also a lot of work. It is a sprint. You want to move your clients as quickly as possible.
There’s a process for how to navigate that and be successful at it. But that is “difficult” in the sense that it is a lot of work in a short amount of time. It’s long days. You’re not taking a vacation in the middle of that process.
But thankfully, that part is primarily measured in weeks, maybe a few months. But you can get the hardest, most difficult part over just in a matter of several weeks.
I’m not going to pretend or say that all of this is necessarily fun. There are some enjoyable parts – I talked about that in a separate episode – but for the most part, it is a lot of work.
Like buying a house, you’ll have fun moments – thinking about how you’ll paint certain rooms, or the new furniture you’ll get – but that doesn’t negate the amount of work you must go through.
But once you go through all that, once you come out the other side, you’ve climbed the mountain, the dust has settled, every day that passes, the difficult parts are farther and farther in the rearview mirror. You’re now in your new place, and you’ll quickly forget about how difficult those long days were. You’ll be grateful that you took the steps to cross the bridge.
But I would tell you from experience, and this is fine, it matters what’s best for you, but there are a lot of advisors and teams that will take the time to learn about the RIA model, they’ll understand the better economics, the better flexibility, the better satisfaction they’ll have with their practice – but still not be able to bring themselves to go through a transition process.
They’ll reach the end of their career, and they retire, and they have regret for never having made the change. And at that point, it’s too late.
It’s easier said than done, but this is why it is important to try and not be overwhelmed and distracted by the process.
Related, to the degree you say… “I want all these benefits. I’m willing to work through the steps. But there are still parts I just don’t want to do myself.”
As I’ve talked about on these episodes, there are ways to mitigate that. I won’t go too far down this path because it’s not the topic of this episode, but for instance, if you join an RIA, versus starting your own, that is going to be an easier transition, because there are things you’re not going to have to do yourself. They also generally make the process easier with the various resources they provide to help with the transition.
Now, you generally shouldn’t choose your path – whether starting an RIA, joining an RIA, or the flavor in the middle – you shouldn’t choose that based on which is the easier transition, because you should play the long game.
But it is what it is, if joining an RIA is perhaps your best path, it will be an easier – not “easy” – but easier transition as a result. So there are ways to mitigate this process to the degree you still need or want that to be the case.
The final thing I’ll say is around how long it takes to work through all these phases.
From the time of a first conversation I have with an advisor or team – they’ve generally watched some of my episodes or listened to the podcast, so they’re not coming in from scratch, but there’s still a lot to learn – from that first conversation to when they might go live, it’s typically six to nine months.
If you had to go sooner, it’s possible. But with some paths, like starting your own RIA, you can’t go live in, for example, 30 days. It’s not going to happen.
I’ve done episodes on the time involved in registering a new RIA, and things like that. If you join an RIA, that can certainly go quicker than starting an RIA. But the point is there are some hard timelines that no matter how motivated you are, or energetic you are to work through the steps, there is a finite amount of time needed.
But ideally, you do this at a measured, choreographed pace. Which again is typically in the six to nine month range.
As for how long the “difficult” parts in the process will last, it is measured in many, many months, not just weeks. Again, that’s why some folks can never bring themselves to work through it.
I’ve had advisors and teams where we hit a dead end (early in the process, and they didn’t proceed.) And then a year later, they get back to me and want to start the process up again, and they’re kicking themselves because they know by that point – roughly a year later – it could have all been done already.
That doesn’t mean they shouldn’t still revisit it all, but the longer you kick the can, the longer the other side of the path is going to take to get there.
Hopefully this has given you a little perspective of how “difficult” the process is, or isn’t. It’s entirely doable. You just need a proper understanding of how it all works, what the options are available to you, what the steps are to get from where you are now to whatever option you decide to take.
That’s what I help advisors with. All these phases from the very first education level to making sure you’re successfully navigating the transition. I’m happy to have that conversation with you as well.
As I said at the top, my name is Brad Wales with Transition To RIA. First things first, if you head to TransitionToRIA.com you’ll find all the resources I make available from this entire series in video format, podcast format. I have articles, I have whitepapers.
At the top of every page is a Contact link. Click on that and you can instantly and easily schedule time to have a one-on-one conversation with me, whether you want to talk about today’s topic or anything else RIA related. I’m happy to have that conversation with you.
Again, TransitionToRIA.com.
With that, I hope you found value in today’s episode, and I’ll see you on the next one.
Want To Learn More?
Schedule a Discovery call and lets begin a conversation.
