Top Due Diligence Questions for Finding the Right Hybrid RIA Platform | WealthManagement by Michael C. Bryan


One of the major themes in the independent financial advisory space in recent years has been the explosive growth of the hybrid Registered Investment Advisory (RIA) firm, a model in which advisors operate their own RIA firm for fee-based business, and simultaneously leverage a broker-dealer for commission-based products. To capitalize on this trend, multiple independent broker-dealers (IBDs) have ramped up their efforts to capture opportunities by establishing their own hybrid RIA platforms. The platforms might include in-house custody and services or partnerships with "outside" fee-based custodial platforms.

But for hybrid RIA firms, finding the right IBD partner and setup can still be a challenge. Too many IBD-owned hybrid RIA platforms resemble how Henry Ford felt about his Model-T when it was first produced: “Any customer can have a car painted any color that he wants so long as it is black.” Specifically, most IBDs today restrict or actively discourage their hybrid RIAs from working with “outside” custodians in favor of their own home grown platform.


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