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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:
AdvisorLaw
Vendor category:
Compliance
Episode host:
Brad Wales
Episode guest:
Courtney Raymond
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 are answering the question, “What is AdvisorLaw?” And to help us with that is Courtney Raymond. Courtney, thank you for coming on.
Courtney Raymond – Hi, Brad. Thanks for having me. Happy to be here today.
Brad – I’ve known Courtney for quite some time. We’ve had these conversations a lot, but I’m happy to finally be putting it together in a concise episode here for folks to be able to take a look at. To jump right in, for those that don’t know, if you could give us that kind of proverbial 30-second elevator pitch of what is AdvisorLaw.
Courtney – Sure. We are AdvisorLaw. We’re based in Denver. We are a national legal regulatory and compliance company. This basically means we do three things: regulatory defense, litigation, arbitration, expungements, RIA services, which is formations, compliance, and private funds. And we have a full M&A desk. So basically what we’re doing is living where advisors and advisor entrepreneurs live.
Brad – Okay, I love it. With those kind of different services, what bucket would you put this in? I typically say, and it’s not a very elegant name, compliance consulting firm, but obviously there’s kind of a legal element to it. How generically would you describe AdvisorLaw? Is it a compliance consulting firm or what bucket would you put it into if you had to put it into one?
Courtney – Yeah, we’re definitely regulatory compliance. So our compliance teams are all led by securities attorneys, which means that you get advice and straight answers to your questions wrapped up into your compliance consulting, which not everybody does. And we think that just makes sense to get the right answer the first time.
Brad – Not only the right answer the first time, but the right answer in general is important in these things as well.
So it is what it is, you’re not the only regulatory firm out there. How would you say AdvisorLaw is different from some of the other solutions? As I talk about a lot on my traditional Q&A series, it’s a good thing that there’s different types of regulatory or consulting firms out there because there are different RIAs and not everyone has the same needs for support. So how would you say that AdvisorLaw is different from some of those other options?
Courtney – That’s a great question. We are really pretty different from the kind of inside-the-box vendors because we’re not template-based. We are particularly good for firms that don’t fit inside the box or don’t want to fit inside a box. So I think that we’re at our best when we have wise teams that feel like they want to be creative and get good advice.
One of the things that we do that’s different from everybody else is provide a full scalable solution and compliance. What that looks like is that we have four service levels for compliance ranging from very robust support for your in-house CCO all the way to fully outsourced compliance. This allows us to kind of be more or a little less if they want for practices in mostly growth mode, right? So we’re able to slide into places where they need extra support in a way that a lot of other compliance firms just can’t.
Brad – I would certainly say that to not only have levels, but to have four levels is pretty unique. Is there an ability as an RIA’s life progresses to move within those levels if the circumstances warranted it?
Courtney – It is. It’s completely scalable. Typically what we see are a lot of breakaway teams, right? Something else we do differently is that when we do formations and we roll into one of our outsourced options, we will assign the CCO with a formation time. The team peeling away effectively doesn’t have to learn everything only to hand it off to an outsourced CCO.
But lots of times people want to start slower, have their hands on the wheel. And then as the practice grows, they can increase service levels. That gives them some personnel and headcount flexibility in sort of the operations admin space when the rainmaker doesn’t want to do all of the work themselves. It’s a nice supplement to slim profile firms where there aren’t just extra people to fill in.
Brad – Yeah, I’ve talked to countless advisors that have a fear of compliance and the fear of not only “Will I be able to do it?” but “Do I have the capacity to do it?” I think it does alleviate some of that concern to say, “Hey, if need be, let me start there with the full-boat experience.”
Obviously that’s more expensive, as the more services that are provided, the higher the cost. But over time if need be, I can dial that down. I think that gives a lot of flexibility to the offering. So nice job on that front.
Obviously you help SEC RIAs. So for those that are listening along that are not aware, while there’s a couple variables, the differentiator between SEC-registered and state-registered is generally 100 million and higher is SEC-registered and below that is state-registered. And so my question is, and this is something I typically ask solution providers of all stripes, is there a minimum size a practice needs to be to use your service?
In this case, for this kind of topic, even if you’re a startup RIA, you need some sort of regulatory compliance support. You would not attempt to register on your own or handle your compliance on your own. That said though, not every provider is able to accommodate all sizes. So to help our audience out, and I know you obviously do SEC ones, do you do state-registered and essentially startup RIAs as well from scratch?
Courtney – Yes. state compliance and formations everywhere, right? So all 50 states, DC, Puerto Rico, SEC, we do full state compliance everywhere. And in fact, we have a pretty robust practice in the under $100 million space, right? And so we do formations, we have zero asset practices, TAMPs, institutional research, fund-only, you know, so we really can do any of that.
One of the nice parts about our solutions is that they are mostly flat rate, which means we’re pricing it by head count. And that means you’ve got a fixed number you can count on, wraparound coverage is everything, it’s unlimited advice. And so what we’re trying to do is, even at our level one service, provide unlimited robust wraparound support for practices that are just starting or a little bit more advanced.
Brad – All 50 states, and it’s also a scale game. I’m not a compliance regulatory consultant myself; I have no desire to get into that space. But if I did, the challenge for those that are not kind of thinking this through is it’s one thing to only support SEC firms, which is important, and that’s one set of rules. But it’s another thing if you’re going to support state-registered RIAs.
While it’s, I don’t know, 85 or 90% the same from one state to the next, there are potential variances by state. So you need a regulatory partner that can help you, that has the scale to be able to dedicate the resources to understand what those are in 50 different states. And so to your point, not only do you have all the states, but just because it’s very robust, you can afford to have the resources to stay on top of all of that. So that’s very important on that front.
Then you alluded a little to price. I know the devil’s in the details so we can’t easily talk specific dollar amounts but I always position it then I welcome your perspective. How do you explain it? I know there’s kind of two parts to it typically. There’s that front end registration cost to kind of get folks to day one and then there’s that ongoing support, which you mentioned the four levels.
Is that typically how you describe how this sort of thing is priced out? Obviously there’s different price points based on different levels, but if someone just says generically “Hey Courtney, how much is this gonna cost me?”, what’s your general start and answer?
Courtney – Yeah, for us, this is pretty simple. We think that a flat rate is the right way to deliver this because we found that if people get charged every time they ask questions or they take more time from the team, they don’t ask enough questions. And we want that communication back and forth. So we bundle all the formation parts together. That’s the lawyer parts to contracts, entity, operating agreement, right? All the way through. And then we bundle compliance together.
All those service levels are flat-rate and based essentially just on headcount and unlimited advice, unlimited time. There’s no big exclusion list; the wraparound is everything that comes up in your compliance here.
What that lets people do is have a number they can count on for compliance which helps them budget scale and still gives them a hundred percent of what they need. So we think that’s the right way to deliver that. I think that it’s very unusual in this space too that we’re really advice and relationship first.
Brad – Yes, and I assume there’s flexibility there. So you explain all this and then, again, let people pick and choose what they want from the different service tiers. Then it depends on the size of their practice or as they grow it could adjust. But I think the transparency is the most important part of it. You just lay it out there for folks, particularly those that are considering breaking away.
You’re trying to build a P&L. You’re trying to understand what your expenses are gonna be. You need this and everything else to be as simple as possible. I like that you use the flat rate approach and just a very simple-to-understand approach. I think that is a big plus indeed.
Obviously we’re very high-level here now. For someone to choose AdvisorLaw, they need to talk to Courtney and dig into the details. But if someone likes all this and they end up hiring you, you get them registered, and you got this service tier that’s been chosen, that’s great and all. However, there’s still a lot that the advisor, advisors, the team don’t know about what they’re still supposed to be doing.
So how do you help train the advisors on this new world they’re in? So yes, you are supporting them, you are helping them sometimes extensively on that highest tier level, but there’s always still some work there at the local level. How do you help those folks that have never been personally responsible for compliance before to get trained as needed?
Courtney – Yeah, we get that a lot and people have anxiety, right? They wonder “Do I know enough? What don’t I know?” So what we think is being proactive is the right way to do it. When we find stuff that we think you need to know, we’re going to proactively reach out. We’re licensed CE providers, so continuing ed is sort of in our bones. And so that is going to come directly from the team.
Typically here we meet with all clients at least quarterly for an extended kind of regroup. We talk about stuff in the news, answer questions. We provide unlimited advice in between but the structured meetings give us benchmarks in time to talk about new stuff, bring people up to speed on what’s new in the space, and offer advice.
Then we proactively reach out if we see anything that they need to know. So they’re not an island on their own trying to figure out, “Do I know enough?” We’re always the net underneath at all service levels.
Brad – And I think it gives some comfort to advisors to know that there is that proactive, reactive, everything that they might need and the support is to not be intimidated by this as an advisor. Particularly folks that are already independent.
Maybe you’re with an independent broker-dealer. There was a time, I’d point out, for advisors to figure out payroll was a bit intimidating, perhaps. How am I supposed to do payroll for my first time ever having employees? How am I supposed to get payroll taxes and somehow do direct deposit, all that stuff?
That can seem daunting, but as long as you use the right kind of vendor and you get trained on how to do these things, they support you; it’s entirely doable. Then you get to the point where you’re essentially just going through the motions going forward. And that’s the same with compliance.
There’s no doubt there’s a learning curve. So for all the things Courtney was just saying, in your first couple quarters for sure, you’re definitely going to need and want those resources to get up to speed, but don’t think that it’s a perpetual learning curve. There’s always some new stuff coming along, but you will get your new world figured out and then you need to retain the support. You always need it, but it does get easier the farther you go along. So glad you’re pointing out kind of how robust that is.
With that kind of ongoing service, a question I like asking, is it possible where if someone’s using a compliance or regulatory provider and over time they feel that solution is just not providing them good value for the price and is not proactive in helping them, can they change providers?
Now for those following along, you wouldn’t generally want to make any sort of change while you’re in the process of getting it registered on the front end. That is not a moving part you can kind of adjust. But Courtney, there may be existing RIAs out there that are maybe watching this, that have a compliance provider, they’ve already got it set up, but that provider’s just not the right fit for them.
Or maybe they’ve outgrown that provider and they need something more robust, like an AdvisorLaw. How does that work? Can folks change over? I’m sure there’s some steps involved, but can an existing RIA change to you if they feel you provide better value?
Courtney – I’m glad they can because that’s most of what we do, actually. I mean we do the formations and roll into compliance but most of what we do is work with compliance clients coming from another vendor. They need a little bit more horsepower. They need a little different flavor of advice, a little bit more proactive advising, a service level their current vendor doesn’t offer. So we do this every day.
We start with a review and update of their RIA documents, kind of detemplate them, get to know the practice, and then we roll directly into one of our ongoing compliance service levels. So, easy peasy. It’s usually about a four-week transition.
We are agnostic at our standard service levels on technology. So if you’re using whatever, Orion or whatever it is, you can continue to use your workflow. We’re going to help you rearrange your compliance program and provide support. So it doesn’t need to uproot necessarily everything in order to make a transition and get a little better on-the-ground support.
Brad – I learn something new every day because almost all of my audience and everything I work with you on, Courtney, is essentially that breakaway, that startup. So great to know that you’re bringing on quite a few existing RIAs that are maybe just seeing better value in the offering on your team. So congrats, that’s fantastic.
Again, we’ve only touched this at a high level. Shortly we’ll get into how folks can reach out to you. But I’m a big fan of trying to set expectations so, if someone does reach out to AdvisorLaw, and spoiler it’s more than likely you’ll be connected with Courtney, and they like what they’re hearing and say maybe this AdvisorLaw is something they should look into, what does that first conversation look like?
If someone sets a time with you, which for most folks that might be watching this is going to be that breakaway example, and this is something entirely new to them and they call up and say “Courtney, I’m starting an RIA, how can you help me?”, what can they expect to happen in that first conversation?
Courtney – Those are my favorite conversations, right, because the rest of the world has told us RIAs are complicated, risky, and expensive. They are none of those things. And so people always come out pretty happy from these conversations. And so what we want to talk about is the formation process, the pieces they need to know before we get started, name, custodian, right.
We’re going to talk a little bit about P&L items. What other things do you have? Have you explored tech? Who’s your CRM? Do you know how you want to charge people? Do you have a trading platform? What are you going to do about E&O? Do you know about cybersecurity? So we’re going to just kind of talk about all of those things, many of which we provide so I can price some of them. We provide other vendor referrals if we’re not the right fit. So talking about P&L and then usually talking about the transition.
What does your current rep agreement say? Can you peel away or do we need to talk about doing a contract analysis of your existing rep agreement, putting together a plan to deal with a non-solicitor or a non-compete. We do that work, too. So talking about the transition, the setup, the pieces that are needed, generally trying to price them out cost-wise, and then moving on to what does it look like when we stand it up and what does that transition look like, which everybody always wonders, what does day one look like?
So, typically first appointments are long. You know, we might go an hour and really talk and dig into it and then I’ll send a whole bunch of information and then usually we’ll go into round two a little deeper. But we’re ready to go whenever they are.
Brad – You mentioned when converting someone that’s already an RIA from an existing solution, that’s a kind of a four-week or so transition process. It’s different for that breakaway that is needing to stand this up from a starting point, that does have to do that registration, which some of is out of all of our control, right, when you send it off to the regulator, to a degree you’re waiting on them.
So how much time do you typically prefer, and I know things can be rushed to a degree but there’s still limits, but from that first conversation to when they’re going live, and we’ll just say it’s an SEC RIA because there’s a little more clarity on exactly the regulatory turnaround on that, to do this all at a measured pace, to spend time to learn from AdvisorLaw what the solution is, make a decision, and then everything they need to do with you and your team to then go live, what amount of time do you typically or ideally like to see for that?
Courtney – I mean, in a perfect universe, I’ll be up with them maybe 16 weeks ahead, and we’ll get started about 12 weeks ahead. Ten to 12 weeks is about the time for the SEC formation, assuming things go fast but not at light speed, right? And so typically we’ll do two, three, four weeks ahead of time kind of trying to sketch things out, answer questions, make sure the pieces are aligned so that they know what we need them to know when we get started. And that’s usually plenty of time.
I have lots of conversations. Sometimes they want to start a year ahead, right? They really are planners. They want to really talk about it. Things are more complicated. So we’re happy to start as far ahead as they want. But ideally, 12 weeks is when we want to sign up and get going.
Brad – Yeah, so there’s a lot that goes into this process from just the soul searching of what someone’s vision is for their practice. And as you alluded to, how are they going to price it out? What kind of services? And then all that needs to get packaged up.
So sometimes I have to be the bearer of bad news when folks come to me and they say, “Brad, I want to start an RIA.” and they think all the steps, and this is just one of the steps, could somehow be done in 30 days or something. And that’s just not going to happen.
So this is a multi-month long process and ideally done at the measured pace that Courtney just outlined. It can in absolute rush situations perhaps be truncated a little bit, again, but you can’t go to Courtney and get an RIA in 15 days. There’s nothing she can do about that. There are some minimums.
Courtney – Right? Like the bare minimum is going to be about 80 days. If everything goes smooth, occasionally we get lucky in a good bounce, but figure eight weeks, absolute bare minimum.
Brad – Agreed. Well, so to wrap up, for folks that are intrigued, liking what they’re hearing, want to learn more, again, we talked about what that first call might look like. What’s the best way for advisors and teams to find AdvisorLaw and begin this process?
Courtney – advisorlawllc.com. Easy peasy. We’re easy to find. There’s a “Contact Us” link on there. There’s a bunch of information about our services, the rest of the stuff we do. I’m always happy to talk to anybody.
Brad – Absolutely. I’ve connected quite a few people to Courtney and always get great feedback. So Courtney, thank you for that. To repeat it again, and we’ll put it in the show notes, the website address is advisorlawllc.com. And with that, Courtney, I appreciate you coming on, helping us out, answering the question “What is AdvisorLaw?” So thank you very much.
Courtney – Yes, thanks, Brad. Happy to be here.
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