4 keys to transition from wirehouse to RIA

Mike Lover, Senior Director, Business Development

E*TRADE Advisor Services


There’s been an uptick in the number of advisors leaving wirehouses for broker-dealers and registered investment advisors in recent years, but breaking into the RIA channel comes with its own set of challenges. By going independent, advisors must tackle back-office bureaucracy and client onboarding procedures, and may become overwhelmed with the scope of services they’re now able to provide.

For advisors making the big move, here are four tips for a smoother transition:

1. Choose your brand

Trying to be all things to all people can be a big mistake. Many advisors stumble out of the gate by not clearly communicating which services they offer. For example, will you offer estate planning? How about tax prep or portfolio management? Can clients buy individual stocks from you, or do you take a straight fee for investment advisory services?

Although your offerings may evolve over time, it’s important to be consistent with your messaging early on to avoid the risk of disappointing clients—while also establishing a niche.

2. Consider utilizing third-party specialists

What about what you don’t do? If you’re not fond of sending clients to competitors, consider making use of third-party practitioners.

For example, you may have decided to take the plunge into portfolio management. You’ve preached the benefits of diversification but don’t want to make your mark as an international equities manager or a fixed-income practitioner delivering 2% to 3% returns.

Using third-party specialists allows you to farm out activities you’d rather avoid, while still maintaining a unique client experience.

3. Consider model-based trading

As your newly established practice evolves, you may find you’re relying too heavily on separately managed accounts to accommodate clients’ desired strategies when many seek similar outcomes and have similar risk profiles.

Map out what each client holds and establish a model-based portfolio so that you can manage multiple accounts at the model level. This provides a cleaner experience for clients and allows you to build an efficient, scalable practice.

4. Enlist digital technology resources

Technology platforms can automate time-consuming back-office tasks and provide sophisticated modeling, trading, and reporting capabilities—plus much more.

But did you get into this business to help people achieve their financial dreams or to learn data encryption, APIs, and secure file transfer protocols? Leave that stuff to the experts by building relationships with outside technology vendors. To succeed in making the leap from a wirehouse, you’ll need to surround yourself with connections that live and breathe the technology space.

You can do this

The road to independence can be bumpy, but advisors who clearly set parameters, practice what they do best, and effectively leverage technology and outside expertise stand a better chance of setting themselves up for success in delivering a satisfying client experience.

Contact us to learn more about E*TRADE Advisor Services, and follow us on Twitter (@etrade4rias) and LinkedIn for the latest advisor insights.

A version of this article first appeared in Advisor Perspectives

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