Experts in the field agree there’s no single best way to structure an RIA practice. At the same time, they recognize that client service must be the standard around which the practice is built.
Whatever structure the principals at an RIA firm decide to employ, it has to fit their business model, says Larry Miles, principal at AdvicePeriod. “You have to think of everything from risk management to execution and process,” he says. “To me, it all starts with the client. What structure and organization are going to produce the best experience for the client? If you start and end with that, you’ll find the right direction.”
“The only absolute right is that you must have defined roles where everyone knows what their job is and what they are good at,” Sarch says. “[The leaders] need to hire and complement themselves with people who can do the things they’re not good at.”
For example, if there is an advisor who excels at dealing face-to-face with clients, have that advisor be in charge of client touchpoints. If an advisor excels at money management and financial planning, let them handle that aspect of the business. And if one of the leaders excels at HR or marketing, let them handle those areas. Otherwise, you have to hire someone, Sarch says.
“In a perfect world you try to make sure the person good at bringing in accounts is bringing in accounts and the person good at managing money is managing the money,” Sarch says.
From the beginning, RIAs need to decide whether they are going to focus on money management or whether they will provide “soup-to-nuts” services such as tax management and estate planning. A pure money manager won’t need as robust customer service as an RIA with more offerings, Sarch says.
Ultimately, an RIA has to have a plan for growth from the beginning to ensure that the firm is structured properly and operates in a way that best serves clients. “You need to have roles that allow people to grow in the profession,” Sarch says. “You can’t look at people the same way you look at a tool. They do — and are good at — different things. People are flawed and capable human beings who grow. The best RIAs allow people to grow into different roles so that the business can continue to thrive.”