Going independent? How to start an RIA and quickly rebuild your book

Many advisors at leading companies are facing a familiar set of dilemmas: 

  • Lack of autonomy
  • A compulsion to recite the “company line” even when it’s suboptimal
  • Being pushed to sell products that they may disagree with

However, breaking away is not just a pipe dream. Advisors who take the time to learn how to start an RIA are able to escape the bureaucracy and achieve the freedom they’ve always dreamed about. This doesn’t mean it’s an easy path to take.

Breaking away takes a rebuilding mindset

If you’re going independent, there’s a risk that you’ll lose a sizable chunk of your book. About 7 in 10 advisors who move to the independent channel are able to take somewhere between 76% and 99% of their clients with them, according to a Shwab study. Not too bad, all told. However, the remaining 3 in 10 risk losing a much larger portion, and 17% of advisors are only able to bring half (or less) of their existing clients out the door with them. 

This can be a scary reality to face, and it’s a risk you’ll need to consider. Advisors who want to learn how to start an RIA must also learn how to rebuild a client base quickly. 

At the same time, a little bit of transitional adjustment in your client base can also be a good thing for long-term growth. As financial services expert Steve Anderson explained in an Oyster Stew podcast:

“This is a great time to just say I’m going to leave 5% or 10% or whatever of those clients back at the old firm, or just say, maybe you’d be better staying where you’re at. So I think sometimes if you eliminate those five or ten, it’s much easier to grow. A lot of times, they’re the people that take a lot of time and effort and don’t give you a lot of revenue. So I think it’s a good time to look at your book. It’s hard to do that.”

It can seem counterintuitive that losing clients in the move can lead to revenue improvements, but this is definitely an opportunity to review your book for efficiency and commit more heavily to your highest-impact clients. “I know we all try to build clients,” Anderson adds, “but sometimes you have to take a step backward to build a better client base.”

Abide by broker protocol, but reach out with purpose

Many large companies have signed the Broker Protocol, an agreement to protect corporate and advisor interests during a transition. A part of this protocol is that you act in good faith during your breakaway into the RIA world — including only bringing certain information out with you, not soliciting clients before you’ve resigned, and other points of consideration. 

Advisor Aaron Hattenbach broke away from Merrill Lynch, but was able to retain 100% of his clients in the transition. His advice is to get guidance from an attorney on complying with the Broker Protocol while still doing everything possible to reach out and retain existing clients. Aaron refrained from smearing Merrill in any way while still explaining the benefits of his new model for the clients.

Specialization can help you to differentiate your new RIA

The global-sized firms can get away with generalized services, but many advisors considering a transition want to know how to start an RIA that stands out from such large names. A more focused niche can be a big help. 

As advisor Andrew McFadden told Kitces, he needed to cut costs when he first started his RIA. An understandable priority as he worked on building up a new client base. This meant working out of a home office in his case, but many clients liked the convenience of meeting in public places or video chatting.

More importantly, he recommends choosing specific clientele and not just taking any business you can get. He chose to specialize in the needs of medical professionals. Some planners work with athletes, doctors, etc. Whatever niche you choose will make you stand out as a specialist and encourage prospects to trust in your experience with similar clients.

Set goals to strengthen your position in the market

A detailed plan for how to start RIA marketing and branding should be one of your first steps during the breakaway. This might start with building an initial target client profile including things such as:

  • Demographic/psychographic information
  • Motivation/top need
  • Obstacles that keep ideal clients from signing
  • A core message to convey your value proposition

Building up your new firm’s brand is as important as building up your client base. What are you going to do to reach new audiences? The best brand-building activities are ones that will also allow you to meet new prospects. An educational approach to marketing can be a great way to build relationships and start conversations while showcasing your expertise to the community.

There’s an Alternative For the Overburdened RIA

At FMT, we’ve worked with many independent RIAs that are struggling to find enough hours in the day. Advisors who are running their own firms wear a lot of hats. In the early going, you’re not only acting as the service provider for your clients, but the head of sales, marketing, accounting, HR, and everything else.

The best thing you can do for yourself is to tackle multiple priorities in efficient, condensed efforts that preserve your valuable time. There are distinct advantages to leveraging a proven marketing system that keeps your business and your relationship with prospects and clients at the center. Teaching a financial education course does just that.

how to start an RIA courses

FMT can help you to both build your reputation and your brand while also generating leads and new clients. Meet your growth goals and attract pre-qualified prospects by doing what you already do best. Our compliance-ready courses, FINRA-reviewed content, and proactive support make scaling much more efficient than traditional one-on-one prospecting methods.


Contact FMT to learn more about what we can do for your new RIA today.

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