Have you ever considered adding fee-based money management to your insurance practice?

I’m a big believer in the fee-based model. Fee-based money management has played an integral role in the growth of my practice over the past eight years. Money management gives me the opportunity to capture all of a client’s investment assets. It allows me to dramatically increase the value of my business due to residual income as well. And it helps me position myself as a total financial advisor with my clients.

Back in the fall of 2004, I had decided I wanted to drop my broker-dealer. I was trying to pick between forming my own RIA or becoming exclusively a safe-money guy, and thus having no securities license. Looking back, it’s hard to believe I labored over the decision. 

Personally, I love running money, so I manage all of our accounts in-house. But while money management offers all of the above benefits, it also creates challenges, the biggest of which deal with compliance. However, many safe-money guys and gals want the advantages of offering money management, but without the hassles of trading, picking and monitoring investments, compliance, etc.

There are alternatives

Fortunately, our industry is full of alternatives. One is to align yourself with another RIA firm, and become an independent advisor rep (IAR) to that firm. You are essentially outsourcing both the actual money management and the compliance. This is a great alternative if you are worried about how to run the securities side, but you wish to be fee-based.

So how do you go about getting the education you need, as well as deciding what RIA firm to partner with? I think the biggest key is in choosing your partner. Beyond the licensing requirements, a good RIA firm will provide you with much of the education you need to become comfortable discussing securities with your clients. This is one reason I think it’s important to pick a firm that has a business model that pursues growth through adding advisors. These firms will typically have infrastructure to support you as you learn and grow your securities business.

Shared philosophies

Finally, you must find a firm that shares your investment philosophies. If you’re currently a safe-money advisor, you very well may be more concerned with preservation of investments than with growth. You then need to know how the RIA firm creates portfolios to protect against downside risk as much as possible. Whatever your philosophies are, pick a firm that uses investment models that you believe in and can be passionate about. That passion will shine through to your clients.

Ultimately, if you find a RIA firm that shares your investment ideals, and the firm can provide you with infrastructure to support you as you learn and grow, you will have many of the tools needed to launch money management into your practice.

For more from Jim Brogan, see:

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