Top Requirements for Starting an RIA: Confidentiality, Consulting, and Compliance

When an advisor decides to leave a wirehouse, there is tremendous risk in planning the transition to independence. But with the help of a strategic partner like TruClarity, every single step is carefully and confidentially designed. Finding real estate, selecting technology, obtaining legal counsel and setting realistic business expectations can all be achieved while keeping your eyes on the prize — creating your own RIA.

Merissa Davis, Director of Platform Operations at TruClarity, helps ensure that all the fine details of an advisor’s transition to independence are executed seamlessly, and most importantly, with complete discretion. “Confidentiality is key,” says Davis. “Financial advisors have contracts, and it is essential to find someone who can work on your behalf and maintain confidentiality.”

Many times, advisors do not realize that they are at risk of exposing their own secret. You may be tempted to explore real estate without a consultant. However, simply touring possible office spaces can prove to be a vital mistake with long-standing consequences.  What happens when a colleague sees you and starts asking questions? Or when your name is left on an information-gathering form or you select the property and your name is associated as public record? These are just a few items that could be discovered by your employer. Professional business incubators like TruClarity provide solutions that eliminate these exact risks.

TruClarity finds vendors with a proven track record and a proactive business model designed to fit this fast-paced industry. They do not sell specific packages. Instead, they guide advisors to the solution that works best for their RIA’s custom needs. “We do the research and we’re there every step of the way. We ask questions, evaluate the products, and give input,” says Davis. The whole process is streamlined so the advisor does not have to get caught up in minutia.

The financial industry is heavily regulated. Whether it’s a protocol or non-protocol break, advisors must ensure they have good advice from the beginning. Wirehouses supply legal and compliance teams. But when you are independent, you are accountable for knowing the difference between self-regulatory agencies (FINRA) and government agencies (SEC).

The financial experts at TruClarity, several who have personally transitioned to an independent RIA team, have the 20/20 hindsight needed to maneuver the path to independence. Their experience prevents hitting expensive and disastrous potholes.

“Compliance is the hidden gem of your business. You don’t need it until you need it, but it’s your life raft. It’s like the muster drill at the beginning of a cruise. It’s 20 minutes well spent that could save your life one day,” says Davis.

Compliance also trickles into marketing and business plans. Advisors breaking free from wirehouses may not understand their marketing needs. Most have never created a brand— one of the most creative and innovative pillars of a new RIA. “One of the benefits of using TruClarity is that we integrate your unique compliance restrictions into your marketing plan from the very beginning. There are a lot of rules, and we can eliminate unnecessary headaches,” says Davis. 

When it comes to running a business and setting realistic goals, the advisor should have freedom to focus on their most important role: being an exceptional financial advisor. While they are the CEO of the new business, one person cannot work in every role at the new firm.

Davis says, “A lot of advisors worked in an environment where they didn’t have to run their own balance sheet or oversee all the details of running a business. The wirehouses did that for them. For this reason, TruClarity’s services extend past launch day. The team is available to handle all ongoing back-office details including human resources, financials, bookkeeping, and more.”

Davis and the project managers at TruClarity help identify factors for a new RIA to be most successful: budgets, fee-base, performance, etc. Davis says, “We tie everything together to give advisors a realistic expectation. We are honest with them. That’s really important as they take the leap.”

Find out more on how to efficiently launch your RIA with TruClarity by contacting us today.