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Now is the right time to start an RIA firm regardless of the COVID-19 pandemic and other challenges, but it is important that advisors make certain they are doing it for the right reasons, according to industry executives who spoke Friday during the RIA in a Box webinar “The Path to Independence: How to Build Your Technology Stack.”

“I think any time is a good time … If you know who you want to serve [and] how you want to serve them” — whether it is an RIA firm you want to start or just about any other type of business, said James Carney, Morningstar head of independent advisor software.

It’s also important that “you have a vision, you have a strategy, you have a plan” and know how you plan to execute it, he said. Carney also recommended that advisors looking to start their own firm talk to others that made that same transition and have been through the same experience.

Agreeing with Carney, Aaron Klein, CEO of fintech firm Riskalyze, noted that some of his best customers have told him they started their own firms in 2008, “right in the middle” of the prior major recession and did it out of necessity on some level and opportunity on some level. Despite starting firms in what might have seemed like a crazy time to do that, they have all found success and grown significantly, he said.

RIA in a Box has “seen an escalating interest in what we would call this path to independence” with advisors starting their own RIA firms in recent weeks and months, GJ King, president of RIA in a Box, said at the start of the webinar.

“Our industry saw a record number of new RIA firms created during” the 2008-2009 financial crisis, and “early signs indicate it’s possible we may see a similar theme emerge out of this challenging time as well,” King said.

However, Klein said advisors looking to start their own firms “need to really think about the unique value proposition you’re going to try to deliver to your clients, and you need to be working backwards from there.”

Carney agreed with that advice, noting: “Absolutely, you’ve got to start with the client,” and then ask several questions: “Why do you want to do it? What is driving you this way? Why do you have passion about it? How are you going to do things different?”

And Carney added: “It can’t be just about ‘I want to make more money.’”

Agreeing with the other executives, Brian McLaughlin, CEO and chief technology officer at fintech firm Redtail Technology, added that “passion will drive you,” you have to believe in serving people and “patience is going to be a huge factor.”

The executives agreed that, after the pandemic is over, advisors may work remotely more often than they did before COVID-19, but won’t shift entirely to remote work.

After all, there is still a need for human contact on some level, but there “will be a big shift to remote,” Carney predicted, adding maybe those who were doing 50% of their work remotely will increase remote work to 80% as an example. Some advisors, however, have already been remote from day one and are comfortable with that, he conceded.

However, McLaughlin said: “The idea that we have to go work in an office has changed, and I think that having the flexibility” for a firm’s employees to be able to work from anywhere is “going to be a continuing trend going forward.”

Certain employees, including compliance officers, “don’t need to be in a physical location, and I think one cool thing about that is that it’s going to open up the hiring ability to go nationwide,” McLaughlin said. Firms will be able to select the “best qualified candidate” no matter where they live and “that’s going to expand the ability for more people to get into the industry,” he said.

“But I don’t see us going fully remote by shutting down offices and canceling their leases,” he said, adding: “I think it’s just a temporary period right now.”

The webinar was held following an announcement by RIA in a Box that it teamed with Morningstar, Redtail and Riskalyze to help new RIAs work remotely and more efficiently in the wake of COVID-19. The new Path to Independence Promotion will enable advisors who partner with RIA in a Box to register a new RIA to use cloud-based technology from the supporting firms, free of charge, based on their unique business needs through December.

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