The Road to Starting Your Own RIA Firm - Fidelity Institutional

The Road to Starting Your Own RIA FirmOwn Your Future

FIDELITY INSTITUTIONAL®

© 2022 FMR LLC. All rights reserved.

Do you have an entrepreneurial spirit? Forming your own Registered Investment Advisor (RIA) firm can allow you to take control of your future, keep more of what you earn, and offer more flexibility as you help clients reach their financial goals.

But how do you know if starting and owning an RIA firm may be right for you?

To begin making this important decision, it helps to know what the road ahead may look like.

Fidelity can be there with you every step of the way to help make the process easier. You can connect with our startup team, who can answer your questions as you’re making this all-important decision—and will be by your side throughout the entire launch and beyond, providing ongoing support that can help your firm grow and thrive.

We find it helpful to think of the journey to launching an RIA firm in four parts. You can use this guide to explore what’s involved, consider what makes sense for you, and find out what owning your own business can offer you, your colleagues, and, most importantly, your clients.

More than 1/3 of advisors are expected to retire within 10 years, setting up the transition of nearly 40% of industry assets.

Source: U.S. Advisor Metrics Report, which surveyed over 8000 advisors. Cerulli Associates, 2021.

Articulate your vision 3

Articulate your vision

Discovery

Do you want to build your own business while helping investors manage their investments and pursue their financial goals? In this initial discovery phase, you can consider what appeals to you about owning your own business and what it can mean for serving your clients at a deeper level.

Key strategic questions to ask yourself:

We felt highly constrained in our ability to provide the type of financial advice for our clients that they deserved—so we solved the problem by going independent.”

—Darren Henderson Founding Partner Corient Capital Partners

ˮ

Why do I want to start my own firm?

What are the challenges or pain points prompting

me to consider this move?

How could this move benefit my clients and

my practice?

Why am I considering this change right now?

The answers to these questions can help you formulate your vision.

We can help you understand what’s involved in starting an RIA business and help you create a timeline and plan for the launch of your firm.

The experience of clients herein may not be representative of the experiences of all clients and is not indicative of future success.

Business Analytics

As you dive deeper into starting an RIA firm, a crucial step is to define the value of your business and clarify what your financial requirements will be as an owner.


The idea that you were going to be compensated for a transaction didn’t seem the right way to be compensated for the delivery of advice. Leaving that industry and moving to the advice paradigm really made sense to me. It’s what I saw people wanting, it’s what I was hearing from my clients.”

—Michael Farr CEO and Founder Farr, Miller & Washington

ˮ

How does my book of business translate from a wirehouse value

to an RIA valuation?

What does my profit and loss and cash flow modeling

look like for an RIA?

Do I require finance options to support starting

my own RIA?

ARTICULATE YOUR VISION

Articulate your vision 4

How we can help

You can partner with us to build your future-ready business model. You’ll benefit not only from our team’s deep understanding of the changing industry landscape to guide you, but from the specialized consultants who can help you set up and take care of the essential components of RIA firm ownership.


Legal, Risk, and Compliance

Understanding the potential benefits as well as your professional obligations is key to understanding what’s required to start an RIA and determining which RIA model is right for you.


When we were thinking of breaking away, we made the determination that we were all going, or we were not going at all. That was critical for us.”


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What will be the entity and equity structure of my business?

What compliance policies will I put in place?

What are the current employee agreements and

team structure?

Starting an RIA firm requires you to adhere to professional, ethical, and regulatory requirements. Many of these rules change over time and vary from state to state, so you should always verify that you have current information.

It’s critical to consult with your financial, legal, compliance, and tax advisors to determine:

• The implications of transitioning from a commission-based to a fee-based model

• The types of assets you can easily transfer from one financial institution to another

• The registration requirements for your firm and your representatives, including yourself

ARTICULATE YOUR VISION

Articulate your vision 5The experience of clients herein may not be representative of the experiences of all clients and is not indicative of future success.

Develop a road map

Real Estate

Running your own business allows you to craft and control the elements that are most important to you. Finding and creating an optimal office space is no exception. You have the chance to create space where you can prioritize client needs while building a modern work culture that will attract and retain top talent.


Each type of office space—whether home office, shared work space or leased space—has its own set of benefits. The key is finding the solution that works for you.What is my office space

need and strategy?What is my “office of the future”

vision, and how will I blend virtual and in-person work?

How does my brand visually align to the client experience

workspace and office?

Develop a road map 6

Technology Stack

Starting your own business means you have the opportunity to take a customer-centric approach to creating and building on all aspects of your business. Nothing better illustrates this point than being able to offer clients and prospects a seamlessly integrated, digital-first experience. As new and younger investors prioritize digital-only ways of doing business, you’ll want to explore your options with a digital-first mindset.


What is the advisor, associate, and investor

experience today?

What technology is empowering my

business?

Do I have a customizable platform solution that’s ready

to manage client accounts on day one?

DEVELOP A ROAD MAP

How will I continue to innovate and ensure firm-wide adoption?


Whatever decision we’re making within the business, [Fidelity is] alongside us every step of the way. They’ve been extremely knowledgeable about the changing landscape of the business and helping us implement new technology as well as new service model for our clients as well as client segmentation.”

—Shannon Eusey CEO, Beacon Pointe Advisors

ˮ


Product and Services Strategy

As we’ve seen across the industry, today’s investor needs are constantly evolving. Starting your firm gives you the flexibility and freedom to branch out from traditional product and service lineups to offer a wider range of investment vehicles and financial planning services.


Which products and services are available

to me today?

What’s my vision for the products and services

I’ll make available at my new firm?

What is my current investment approach?

What are my challenges?

DEVELOP A ROAD MAP

How much time do I spend constructing

portfolios?


Fidelity was in our offices on the day we broke and were there for many months following. I watched the Fidelity personnel sleep less than we did in those first few weeks as they were getting accounts open, getting assets transferred, giving us updates along the way.”


ˮYou will be able to meet the needs of your clients and your firm on day one by leveraging our flexible, open architecture platforms that are built for customization.

How we can help


How we can help

Brand and Communications Strategy

During the discovery phase, you answered a fundamental question: Why do you want to own your own RIA firm?

This answer helps inform your value proposition: a statement that expresses in a compelling way what your firm does and why your firm stands apart from others.

Thinking about these types of questions may sound ancillary to the central work of your new firm, but the answer can serve as your north star—the reason that encapsulates why you want to make this move in the first place. Any decision you make as you set up your new firm should align with this vision.


What is my business vision, and what makes my firm unique

compared to my competitors?

Who is my ideal client? What is my strategy for end-to-end client

communications and launch?

You’ll receive a more streamlined experience as you create the vision for your new firm, thanks to our consultative service model and team of collaborative specialists.

DEVELOP A ROAD MAP


Ensure a smooth transition

Business and HR Operations

As you make your transition to starting your firm, you need to make sure that you have the business foundation and infrastructure in place to support your practice.

Preparing to launch means you’ll need to implement plans for the last essential elements, namely business operations, human resources and benefits structures, and custodian integrations.

In addition to the areas we’ve already reviewed, you’ll want to:

• Ensure you’ve clearly defined advisor roles and the goals of your firm

• Understand how your custodian will onboard and support your firm

• Make a plan for supporting clients through the transition


Is your team fully aligned to the

business strategy and vision?

Is your technology stack in place, and can it successfully

handle transitioning your clients’ accounts?

What existing associate benefits will carry over to

the new firm?

What are the roles and responsibilities for each associate?

What will the benefits structure be for each associate?

Ensure a smooth transition 10

Continue to grow your business

As part of your firm’s ongoing development, you’ll want to focus on areas like marketing, professional development, and building out research and client resources.

Once your business is up and running, Fidelity’s Practice Management Program can help you drive scale, serve your clients, and keep you at the forefront of your industry. We offer:

• Business development services to help define strategies for reaching prospects and enhancing client relationships

• Marketing and technology and operations consultants to help identify appropriate strategies and solutions based on your needs

• Access to a comprehensive suite of practice management third-party resources

• Access to proprietary research to help measure and improve client satisfaction and understand market trends

• In-depth market commentary and analysis from Fidelity’s Asset Allocation Research Team

I don’t think we can actually grow our business, based on what we want to do over the next five years, if we don’t have Fidelity by our side”

—Shannon Eusey CEO, Beacon Pointe Advisors

ˮ

Continue to grow your business 11The experience of clients herein may not be representative of the experiences of all clients and is not indicative of future success.

Information provided in this document is for informational and educational purposes only. To the extent any investment information in this material is deemed to be a recommendation, it is not meant to be impartial investment advice or advice in a fiduciary capacity and is not intended to be used as a primary basis for you or your client’s investment decisions. Fidelity and its representatives may have a conflict of interest in the products or services mentioned in this material because they have a financial interest in them, and receive compensation, directly or indirectly, in connection with the management, distribution, and/or servicing of these products or services, including Fidelity funds, certain third-party funds and products, and certain investment services.Information presented herein is for discussion and illustrative purposes only, and is not a recommendation or an offer or a solicitation to buy or sell any securities. Views expressed are as of the date indicated, based on the information available at that time, and may change based on market and other conditions. Unless otherwise noted, the opinions provided are those of the authors and not necessarily those of Fidelity Investments or its affiliates. Fidelity does not assume any duty to update any of the information.

Third-party trademarks and service marks are the property of their respective owners. All other trademarks and service marks are the property of FMR LLC or an affiliated company.

Fidelity Institutional® provides clearing, custody, or other brokerage services through National Financial Services LLC or Fidelity Brokerage Services LLC (Members NYSE, SIPC).

© 2022 FMR LLC. All rights reserved.

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The Road to Starting Your Own RIA Firm - Fidelity Institutional

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