The Future of Wealth Management Is Fee-Only
According to a recent Cerulli study, independent Registered Investment Advisors (RIAs) are projected to control nearly a third of all advised assets by 2027. That’s a 27% increase in just a few short years. Now is the time to explore why transitioning to a fee-only model might be the best choice for you and your clients.
If you’re an independent financial advisor or considering a shift from an employee-based model, this guide will help you navigate the fee-only RIA path, empowering you to build a business that thrives on transparency, flexibility, and client-centric services.
Why Go Fee-Only?
Operating as a fee-only RIA provides advisors with the opportunity to eliminate conflicts of interest and maintain a fiduciary responsibility to their clients. Here’s why the fee-only model is becoming the preferred choice in wealth management:
- Transparency: Clients benefit from a clear, straightforward pricing model without hidden commissions or incentives.
- Fiduciary Duty: Fee-only RIAs must act in the best interests of their clients, offering truly unbiased advice.
- Competitive Growth: RIAs have been growing at 12% annually since 2016, outpacing traditional advisor models.
- Flexibility: Run your business your way—whether that means setting your own fees, choosing your products, or determining how you engage with clients.
How to Navigate the Fee-Only RIA Path
Transitioning to an RIA requires careful consideration of the following elements:
- Understanding Regulations: As an RIA, you’ll register with either the SEC or your state and will need to appoint a Chief Compliance Officer (CCO). You’ll also need to drop your FINRA certifications since you’ll no longer sell commission-based products.
- Pricing Models: Say goodbye to commission-based products and embrace transparent fee structures. This could mean hourly fees, retainers, or a percentage of assets under management (AUM).
- Compliance and Technology: As a fee-only RIA, you’ll need to build a compliance program and integrate the right tech stack. The right partner can help manage these complexities, allowing you to focus on growing your practice.
This article is posted at thecommonwealth.org
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