Meeting The Requirements To Start Your Own RIA Without Breaking The Bank | Nerd's Eye View by Michael Kitces


Launching a business is hard enough in any industry, but getting through the requirements for setting up an RIA and figuring out the necessary technology vendors and software to have in place when starting a firm can be especially daunting. For many potential new advisors we talk to in XY Planning Network, the hardest part (and biggest fear!) of starting a new advisory firm isn't even about getting the first few clients, it's just about the stress of figuring out what to do to actually start a firm and not miss any of the key compliance or other requirements!

In this guest post, financial planner Andrew McFadden shares his own story of what he went through in starting his RIA, from making decisions about office space and who his niche target clientele would be, to handling the compliance requirements for forming the RIA and associated business entity and obtaining E&O insurance, to all of the hardware and software choices that a startup advisor must navigate. All in, McFadden estimates that the startup process cost him only about $7,000 up front, and his practice has on ongoing overhead expense of just $500/month.

And notably, McFadden chose to launch his firm after reading a prior Nerd's Eye View guest post by Sophia Bera about how she set up her RIA and started her practice for less than $10,000 - realizing how feasible it was to get started on a modest budget, he decided to go for it, and is now "paying it forward" with his own story to inspire others.

So if you've been thinking about making your own transition from a broker-dealer to launch an independent RIA, or are wondering what it takes to launch a new financial planning practice from scratch, I hope that you find today's guest post to be helpful and inspirational as you think about how to satisfy the requirements to get started yourself!


Back to listing