Permission to Jump

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Eldon Reese Advisory Group, Sept. 2024

November 2022 marked the official launch of our RIA, Eldon Reese Advisory Group, but the idea was sparked 5 years prior. Just to clarify, it didn’t take us 5 years to establish the RIA, it took us 5 years to summon the courage to begin. We had never gone down the path to actually start a business, let alone a Registered Investment Advisor (RIA). Out of fear and uncertainty, we dragged our feet, but I remember the exact day, time, and location when that finally changed.

Courage

It was September 16th, 2021, 4:30pm, Park City, Utah while attending the Allegis Advisor Group Altitude Conference. As the day was ending, we listened to a panel discussion with 4 financial advisors from diverse backgrounds, but one thing in common; they were running businesses. They were not just producers, agents, advisors, or representatives, they were business owners. That’s what I wanted. So, I decided the 5-year journey to find courage was over. When I returned home from that conference, we started making plans to create our RIA.

I’m certain that there are others in the financial industry who have been thinking about breaking free, but feel that it’s either too hard, too expensive, or just don’t know where to start. I want to share with you the steps we took, my expenses, and provide some direction so that you can get started. And maybe you won’t need to spend 5 years thinking before taking the leap.

Process

  1. Network. Over my 15 years in the financial services industry, I became acquainted with a few advisors who had started RIAs. I reached out to them to hear the pros and cons. Their experiences were extremely helpful as I navigated this new terrain. Many advisers are willing to let you pick their brains on what worked for them and what didn’t when they launched their business. Or at the very least, you can check out their websites and review their ADV documents to get a better idea of how they are structured.
  1. Developed a Plan. I created a business and strategic plan for the business. With my prior experience, I knew exactly where I wanted to go, I just needed to develop a plan to get there and then execute that plan.
  2. We Chose our Business Name. Eldon and Reese are family names. Advisory was to highlight our primary focus in “planning first” and Group because we wanted our clients to know that our entire team is working on their behalf. My wife and I brainstormed for hours, and I must have searched at least 100 possible names before realizing that my best option was to create a company name that was personal.
  3. Secured my website and email Domain. I knew that our name was unique, but I wanted to claim the website as soon as possible. I also purchased a few extra, just in case. We designed our website in an “inactive” status until our official launch date.
  4. We created a very in-depth Client Communication Plan, including a FAQ document. Over the past 15 years we have worked with several clients and we wanted all of them to come with us. We did not have any “non-compete” agreements, but we knew that our clients would have questions. Our goal was to answer their questions before they asked.
  5. We chose LLC as our entity type and registered in my home state of Oregon. The process was fairly simple and straight-forward. I don’t remember the exact fee, but somewhere around $50-$100.
  6. Apply for a Tax Identification Number. We did this in conjunction with Step 6.
  7. Establish Bank Account(s). We opened our company bank account at the same institution where I bank personally.
  8. We chose to use QuickBooks as our Accounting Program and Gusto to run our Payroll.
  9. Here are a few of the Other Service Providers that we chose:
  • RightCapital – Financial Planning Software
  • Trello – Project Management
  • Red Tail – CRM
  • Zoom – Virtual Meetings
  • Calendly – Online scheduling
  • DocuSign – Electronic Signatures
  • Advice Pay – Financial Planning Fees
  1. Establish Relationship with Custodian(s). Initially, we partnered with Altruist, designed exclusively for RIAs. They handle our performance reporting and fee billing. Eventually we added relationships with Pershing and Schwab to gain access to the account types that Altruist was not able to handle.
  2. Connected with a Compliance Consultant. I interviewed and/or investigated a few companies and individuals who have this as their specialty. I eventually chose a consultant, Rita Rhodes with Adroit Compliance, who had several years of experience with several different states. I wanted to have a lot of control over the setup, so I chose someone who charged by the hour and not the project.
  3. Our Compliance Consultant assisted with these steps:
    1. Establishing our IARD/CRD Account
    2. Advisory Agreements
    3. Form ADV Part 1, Part 2A, Part 2B, and Form CRS (Form ADV Part 3)
  4. Our Compliance Consultant Filed our Application for Registration with Oregon, Washington, and Utah. Registering in each state was necessary given that our AUM when we started was under $100M.
  5. We designed and printed Marketing Material for current and future clients.
  6. Our Compliance Consultant also Filed Form U4 for our IARs.
  7. Our Compliance Consultant helped us Prepare our Compliance Documents. These included our compliance manual, code of ethics, business continuity plan, business succession plan, cybersecurity, and privacy policy.
  8. Once we received approval from the respective state agencies, we Launched! Our first step was to execute our client communication plan. I’m not sure what the average retention rate is for an advisor who transitions from a Broker Dealer to an RIA, but we retained 98% of our clients.

Expenses

Throughout these steps, there were mandatory fees and other expenses we incurred to set up our RIA and provide a solid foundation for growth. These included consulting and marketing expenses and the registration fees as listed below. Your specific expenses will vary based on your state and situation.

Our RIA setup expenses:

  • Compliance Consultant – $3,570
  • FINRA – $740
  • State Registrations – $200
  • Marketing – $1,190
  • Website – $2,000

Total:    $7,700 (approximate)

Now What?

After navigating this process and learning from the experience of others, we feel that we have a lot to share with advisors/teams that want to break away from their broker/dealer and jump into the world of independent financial advice. We are happy to share our experience, expertise, and insight with anyone considering this change. If you are interested in learning more about setting up your own RIA, please feel free to reach out to us. We are happy to help.