More On Legal & Compliancefrom The Advisor's Professional Library
- The Need for Thorough and Effective Policies and Procedures Whethere an advisor is SEC or state-registered, RIAs must revise their policies and procedures to address significant compliance problems occurring during the year, changes in business arrangements, and regulatory developments.
- Differences Between State and SEC Regulation of Investment Advisors States may impose licensing or registration requirements on IARs doing business in their jurisdiction, even if the IAR works for an SEC-registered firm. States may investigate and prosecute fraud by any IAR in their jurisdiction, even if the individual works for an SEC-registered firm.
Schwab Advisor Services said that a "persistent undercurrent of uncertainty" at the wirehouses was prompting many wirehouse brokers to take the independent route. Supporting that claim, Schwab reported August 27 that in the first six months of 2009 74 advisor teams had joined the RIA custody arm of Charles Schwab & Co., compared to 48 advisory teams that had cast their advisory lot with Schwab in the same period of 2008.
In a prepared statement, the Schwab executive in charge of its Advisors Turning Independent (ATI), initiative, Barnaby Grist, said the advisors making the move believed the RIA model allowed them to provide better service to clients and provided a better chance for the advisors themselves to enjoy "greater long-term financial success."
Grist, managing director of strategic business development for SAS, said that Schwab had released a new report--A Case for Starting or Joining a Registered Investment Advisory (RIA) Firm--to help advisors do just that.
The report includes a worksheet that favorably compares the compensation benefits of running an RIA firm versus accepting a forgivable loan from a wirehouse or similar institution, concluding that owners of successful RIA firms can earn "69% to 73% net compensation, or owner's income plus profit, less expenses for non-owner professional salaries," and that the "average RIA owner typically earns 60% to 65% net compensation."
The report can be downloaded here.