How to Start an RIA

Check the “Exits”

Compensation & Compliance

You probably don’t have to be told that having a thorough understanding of your current and future compensation and fee revenue—and the impact of transitioning from commissions or insurance trails to a fee-only structure—is very important when crafting a feasible exit strategy.

There are a few things to consider when factoring in your resources and timing.  First, let’s unpack some baggage you may be holding onto regarding your current income structure with a little exercise we like to call:

IS THE DEVIL YOU KNOW REALLY BETTER?

If you have a book of clients generating revenue from commissions or trails, do not underestimate the powerful pull of sticking with “the devil that you know” pay structure. 

It feels consistent, dependable, and secure. (Not hard to understand why someone who deals in securities embraces a structure that reinforces itself.) 

But at what price?  Financially, mentally, emotionally, and spiritually? 

It begs some questions:
It may be what you know, but does it know you? 
Does it allow you to serve who you want, how you want? 
Is it in alignment with your values, passions, and goals? 
Are you paying out more than you are gaining in this relationship?
Is it really your only option as a financial advisor? 

If you answered “no” to any of the above, then perhaps letting go of the devil you know may be easier and less scary than it has seemed in the past.

Feel better? Good. Let’s shine a light on that “devil” you don’t know.

Fee-only revenue free from expensive advisory firm or brokerage payouts can not only be profitable, it has also proven to grow quickly—especially when you and your clients are the ones benefiting from your hard work—and not paying out on it. 

We think you'll agree, the easiest part of this whole journey will be scratching out payouts! 

Finally, if you are trying to time your departure with state registration timelines, RIA firm registrations at the state level can vary, but generally average 6 -12 weeks. 

Starting with at least $100M assets under management? You may be able to skip state registration and go to SEC registration, which tends to occur within 45 days of filing your Form ADV.

Heads up: Your existing firm has 30 days to file a Form U5 (termination) for you following your resignation. In states that don’t allow dual registration, or with a firm that is not supportive of allowing you to be dual-registered as part of the transition, a compliance officer that is slow to terminate an IAR could create an additional unanticipated delay.

Pre-departure Checklist

Restrictions

Registrations

Qualifications & Requirements

Notification & Celebration

Step 3. Build Your Craft

Once your Pre-departure Checklist is completed, it’s time to build out the “body” of your firm.  

Download your First Year Business Plan and grab the firm terms you wrote down in Chapter 1.  If you haven’t started dreaming yet, no problem.  No time like the present. Dream big and fill in the first box of your plan.  

One box checked off! Feels good, doesn’t it? Keep that ideal future in mind as you complete your plan. If you get stuck on any of the items, check back in with it and see if they match up. That is an important part of the “who” you want to be.  

Remember: identity is destiny.  Once you know who you want to be, what to do flows from it. 

Your Guidance System

A good business plan acts as a working navigational tool that guides you through every stage of business management. Think of it as a GPS that establishes where you are and where you’re going, then provides an ongoing route between the two. 

Leveraged effectively, it will be your true north—performing as a compass, map, tracking system, course-correct, and estimated time to arrival. 

This Business Plan is unique in that it’s designed to help advisors define your “who” as well as your “how.”  It will help you create a mission-driven firm that flows from its core values. You will find that codifying those values can result in a defined client experience that you can repeat, market on, and pass along to employees.

As you work through this plan, keep it high level. We’ll drill down on the details in Chapter 4 when you taxi toward takeoff. 

The riches are in the niches!

Take it from the tried-and-true crowd and say it out loud: The riches are in the niches!

We’ve said it from the beginning (XYPN Radio Ep #11: Crisis of Differentiation and the Niche Imperative as a matter of fact) and have heard successful advisors echo it ever since.  Differentiating yourself based on a niche will grow your business faster and make you happier.

When it comes to selecting your niche for the business plan and understanding the benefits of marketing to it, consider basing your niche on: 

The Name Game

Finished your Business Plan?  Fantastic! Here’s a checklist for you:

If you’re all checked off, let’s circle back to your name.  Does your original idea still fit?  Did you forge a new one? Need help? 

There are as many ways to “namestorm” as there are names, find the process that fits you to find the name that fits you. Some things to try/keep in mind: 

C.Y.A.

While doing a domain search for your firm’s name indicates whether the domain is available or not, it is not the only (or best) way to confirm whether or not there is another firm anywhere* out there with your name performing similar services. 

*It used to be that you were protected by geography if no other business in your area offered the same services. With firms conducting business virtually, however, your “area” is the world wide web, and they can challenge you. 

Best practice to protect from confusion (at best) or litigation and possible name change down the road: 

Search the United States Patent and Trademark Office (USPTO) database to ensure your mark (name) is available.  

Registration of a trademark is optional in the United States. However, a trademark registered with USPTO provides broader rights and protections than an unregistered one. It is valuable to confirm no other financial advisory firm shares your name even if you decide not to register it. 

Step 4. Grab Your Co-Pilot

A wise RIA owner once said, “A journey of a thousand miles to fee-only financial advising begins with joining XYPN.”

Are you ready to join XYPN and take your first steps toward freedom? Have you:

Checked off all of the above? Fantastic. YOU ARE CLEARED FOR TAKE OFF. 

It’s time to grab your co-pilot and join XYPN. (Questions? Our Success Strategists are standing by!)

Next stop, freedom.

How to Handle IR Like a Boss

We want you to wear your Chief Compliance Officer cape (because that’s what it will feel like) with confidence. 

As an overview, here’s what you have to look forward to with state registration of your Registered Investment Advisor (RIA) Firm. 

Step 1. Establish Your FINRA Gateway 

Step 2. Fund your FINRA “Ebill” account 

Step 3. Prepare registration application (filed with SEC and state)

Crew Up

Another wise RIA owner once said, “Every pilot is only as good as his crew.” 

While you can fly compliance solo, do you really want to?  

Like so many before, you may find that hiring a compliance solutions partner to have your back brings you peace of mind that’s worth every penny—especially if the steps above can be made easier with templates, examples, explanations, and a real person dedicated to holding your hand and double-checking your work.  

If you’d like to partner with a team of real people who offer customized, simplified compliance support with a smile, look to XYPN Compliance to help you every step of the way during your state or SEC registration and beyond. 

XYPN Compliance RIA Registration Services

Join a Preparing for Registration Call
These weekly calls, hosted by the Compliance team, will help you jumpstart the registration process and get you well on your way with the first steps toward registering your firm.

Your team will cover requirements for starting the registration process as well as discuss compliance considerations as you determine your Services and Fee Structure related to financial planning, investment management, and other common services.

Initial Registration Office Hours
Every Wednesday our compliance experts are available to answer questions on all things compliance:

To understand all things compliance beyond the initial registration process, calculating assets under management, and what to expect with your annual ADV Update, download The Essential Guide to RIA Registration.

Check Your Instruments

To get all of your business management instruments operating at optimal capacity, our Member Experience Team will guide you through a month-long program focusing on setting your business, processes and planning up for success.

XYPN Academy provides all of the preparing to launch help you need through calls, on-demand courses,  templates and other content necessary to help optimize your technology, sales, marketing, financial planning, and business and practice management.

Check Your Support Systems

There is a reason “community” outranks other XYPN benefits 3 to 1 in surveys. 

Your support systems will make all the difference between a smooth and a turbulent journey.

Whether you learn from others’ experiences and expertise, feel “seen” by someone who’s been there, or gather all the “boots on the ground” 411 on best practices, you will be a better advisor if you connect. Trust us on this one. 

Work with your Member Experience team to familiarize yourself with all XYPN has to offer, and then plug in—because you may be independent, but you’re never alone with our community!

Other great places to meet advisors that can help you stay on top of trends, gather advice from someone who’s encountered a similar scenario, or simply make a new friend, include associations whose memberships are included with XYPN:

Get Your (Business & Financial) Ducks in a Row

While building your network, taking care of a few more pre-launch items is essential. If all of your compliance and registration work is complete, now is the time to open a business bank account and apply for a credit card.

It’s also a good idea to revisit your business plan. Do you need to make any changes? Do you need coaching to help you plot the best possible course?  

Before you can advise others on what to do with their money, it’s critical to ensure you can practice what you preach—make sure your financial house is in order before moving on to clients.  Is your First Year Budget on track? 

Create Flight Paths That Promise Smooth Journeys 

With any business, the work you do upfront can pay dividends. (Yes, that was absolutely intended). 

But seriously, start by checking out the robust tech stack included with XYPN membership that we sourced, road tested and continually review for optimal performance. You’ll find everything you need to succeed—and a team to help get you up to speed!

Taking time to focus on a few business practice items now can save you considerable time and money later. Some kickstarters:

If you haven’t already, now’s the time to get your hardware in order. Your phone, computer, and high-quality scanner/printer/copier. 

Register your website domain and email address if you haven’t already. While you're at it, set up email and social media archiving so you don’t have to deal with compliance issues later. XY Archive is a great place to take care of this.

It’s up to you, but you’ll need to decide whether to go 100% in the cloud or purchase a server. These days it’s easier than ever to utilize the cloud, but make sure you’re choosing the right vendors to keep your client information compliant and secure (2FA is always a good sign).  

Many other types of software can help your business. These are some of our favorites, but to cover all the bases, make sure you have: 

Also, don’t skimp on system backup for electronic data and software — you’d hate to lose all of your valuable assets.

Financial Planning for the Financial Planner

It will be very helpful to develop an initial financial planning process timeline, determine an effective client fee structure for services, and establish a standardized reporting package for client meeting deliverables. 

Need help with these? No problem. XYPN has a financial planning process and workflows that you can customize. 

Viva Consistency!

You’ll find that creating an annual Client Service and Communications Calendar to ensure you are consistently creating touchpoints with your clients and prospects is incredibly helpful.

There are several scheduling platforms available that work well for both. Not sure which will be your best fit? Check in with the XYPN forums, your mastermind group, or XYPN VIP Group to see what platforms others recommend that could be a good fit for you. 

Once you see how quickly others with the same experience respond and how thoughtful and supportive they are, you’ll find yourself going back for more insider advice—for everything!

Codify Your Client Experience

It’s easier to keep an existing client than to find new ones, so dedicate time to ensuring you can consistently deliver exceptional service. 

Codify your client’s experience from prospect to ongoing client management and create financial planning templates that streamline the client experience.

Plenty of AI plug-ins can help you take notes during meetings, remind you to follow up, check your spelling and grammar, and more. Don’t be afraid to use them! Your clients will appreciate the extra care. 

Choose Your Own Adventure: Investment Management and Tax Services

As you close in on take-off, just a few more deck checks: 

Investment Management:

Will you provide investment management services? 

If YES:

1. Connect with XYPN Invest to discuss engaging them as your TAMP solution

2. Establish a relationship with a third-party custodian (XYPN’s partnership with Schwab offers many benefits, but it’s your choice!)

3. Register/plan to attend a DFA virtual conference (if desired)

4. Create a fee schedule for investment management services

If YES, but you choose not to engage a TAMP:

1. Establish an investment policy process for initial security selection and ongoing performance monitoring; create model portfolios for managed accounts 

2. Establish an investment philosophy 

3. Purchase portfolio management, account aggregation, rebalancing, and risk tolerance software

4. Create a standard investment policy statement template 

If NO:

1. Decide if you will:

   1.  Advise clients to self-manage portfolios or

   2. Find an investment advisor to refer to if desired

If A, establish an investment policy process for initial security selection and ongoing performance monitoring. Create model portfolios for client-managed accounts.

Tax Services:

If you are not transitioning from the tax world already, will you offer tax prep or planning?

If YES: 
Great! It can help define your niche/differentiator/positioning.  

Take Time, Make Time for Marketing 

Here you are—ready for take off!

You’ve done all the diligence. You’ve codified, calendared, and created everything that will streamline your client experience. 

Next on the checklist: 

Now, if only your future clients knew what you have to offer and be proud of.  

Yep, you see where we’re going with this.  Now that you’re ready for clients, it’s time to talk about attracting them. That’s right, marketing.

For successful RIA firms, marketing can make a huge difference between having only a handful of clients or finding your groove and connecting with your ideal customer served by your niche that turns on the customer tap.

Build it and they will come, right? Well, not exactly. They have to be aware of you first. You can build the greatest baseball field practice but if they can’t see you through the cornfield, they’ll just keep on driving.

Fortunately, XYPN has all the resources you need to build a solid marketing plan that gets you seen, heard, and engaged.

Created specifically for advisors, our on-demand courses, webinars, templates, and roundup of marketing blogs are all focused on the most impactful steps you can take to gain traction with your ideal customer. 

As an overview, here are steps you can take to build a strong customer pipeline:

Step 1: Identify Your Ideal Customer

Imagine them as a person—what’s their background?  What’s on their mind?  What problem or stress are they trying to solve or alleviate?  What motivates them and what story can you tell that connects them to you in a way no other can?

Step 2: Build Your Brand & Positioning 

Great news: you’ve got a headstart on defining who you are and what your position in the market is with your Niche and Business Plan! You’ll be building on these as you crystalize your brand identity so you can communicate with a clear and consistent voice that resonates with your ideal customer. 

Step 3: Learn the Basics 

For a crash course on outbound versus inbound marketing and which is better for RIA firms, read: Marketing v. Prospecting: Knowing the Difference, and Developing a Plan. Also, Own Your Niche: Inbound Marketing for RIA Owners. 

Step 4: Map Your Ideal Customer’s Journey 

Our Marketing Funnel Template helps you map your customer's journey as they move through your funnel from the first touchpoint to engagement.  It also lays the groundwork for Step 5.

Step 5: Create a Communication Plan

Create a strategic plan with a calendar and messaging bullets that maps to your Marketing Funnel and follows the FRED model: 

• Familiarity: tell a story that makes your customer feel “seen” and understood because it’s what they know

• Relevance: message in terms of what hits closest to home for your ideal customer and resonates at a personal level

• Esteem: build likeability, trust, and belief: the three dominoes which cascade into one another until your customer finds themselves not only wanting to engage with you, but also wanting to invite you to their next barbeque!

• Differentiation: builds on the equity of your niche to define the value only you can provide them 

Step 6: Create Content Mapped to Your Marketing Funnel

Create at least one piece of content for each stage in your customer’s journey: Awareness, Consideration, Decision to get you off to a running start.

Step 7: Plan to Execute Ongoing Content 

Add “Create Content” time to your calendar—as often as you can initially—so you build up your content “library” that acts as both a resource for your customers and steam for your SEO—the engine that helps you be seen through the “cornfield” and drives traffic straight to you! 

Taking the “Sell” Out of Sales

On your Marketing Funnel Template in the Prospect Call Box write: 

Be Myself
LISTEN

That’s it.

If you’ve effectively nurtured your prospect through your funnel this far, this will just be another conversation with them. The main difference is that you’ve been doing all the talking so far—through your blogs, website, emails, infographics, how-tos, webinars, and whatever else you’ve done to build the relationship. 

Time to stop “talking” and start listening. Of all the sales tools you could use, this will benefit you and your relationship with your client the most. 

Your goal in this conversation: connect with them as a person. The rest will follow.  

How you connect with them is as unique as you are.  (Yeah, that’s the “Be Myself” part). 

As for the “Listen” part, it’s the first step in establishing a healthy, two-lane partnership, right?  And if they feel you’re going to be a true 50/50 partner in this relationship right from the start—meeting them in the middle and working together toward their success—you’ll nail the sale without having to sell!

To do that, remember to KISS and focus on accomplishing two things: 

Identify the Real Success

A good opening question is: “What does success look like for you in this relationship?” This will prompt the rational part of their brain into telling you what they think they think they want or need to solve for.

But you won’t get to where you need to in the conversation unless you keep digging until you reach the emotional root of their want or problem. Finances are so deeply entrenched in our socio, psychological and behavioral economics that it’s almost impossible to NOT hit an emotional nerve when it comes to solving for a financial need.  

Think of it as a gold vein lying under surface ideas about what they think they want or need to solve for. You could waste time and energy focusing on all the ideas in the “dirt” around it—but you won’t hit the payload until you dig down and strike that vein.  

If value needs to be addressed, ask them how much it will cost them if you don’t help them.

Here’s an example between Sara, and her prospective client, Dave:

After exchanging some pleasantries and connecting over a shared love of a pastry shop Sara once visited in Dave’s hometown, Sara asked, “So what does success look like to you in this relationship?”  Dave explained he needed to know if his 401k and portfolio were “going to be enough” and if not, what Sara would recommend he do to grow it enough to retire by 67.  

Rather than crunching numbers or launching into a laundry list of services she could offer, Sara asked, “Is it fair to say that since you’re asking whether it’s enough, you’re concerned that it isn’t?” Dave replied, “It’s not that I don’t think I have enough for my retirement, I guess I’m more worried that Charlie has enough.”  He went on to explain that his adult son, Charlie, would need extended care because of his severe autism.  

Seeing a shift in Dave’s body language, Sara could see that they were getting to the emotional root of Dave’s “want.”  She drilled down and asked, “Is Charlie’s future security keeping you up night?”  Dave admitted it was, in fact, top of mind during his midnight mind marathons. 

Sara acknowledged how stressful that must be and closed the deal with, “My background in navigating extended care will help us develop a realistic plan that gets him the security and you the sleep you both need.”  

When Sara shared her pricing structure, all Dave saw was relief from his fear and a path to peaceful sleep—and it was worth every penny.

Check in With the Control Tower

Schedule time every week for yourself (Make this a priority!)

Remember you’re human. There will be moments of doubt and straight-up nerve-wracking anxiety. Strong among them is imposter syndrome. (For real. Check out almost any episode of XYPN Radio for stories of the syndrome that racks new and experienced advisors alike.)

Recognize that you would not be experiencing these moments if you didn’t care. But you do—and that’s what makes your work so important and valuable to the lives you are making better.  So, breathe it in and then let it go. Keep doing you. The rest will follow. 

Remember you’re supported. Your Member Experience team and many other points of contact at XYPN are just a click, call or message away! They are eager to be there for you on this journey, so reach out and stay connected!