Daniel Yerger left his hybrid Broker-dealer RIA to launch his firm, MY Wealth Planners, and grew revenue by over 164% in the two years since. Here’s how he did it.
“If you’re considering leaving, it’s probably already time to build the plan for transition. Any doubts you have are not material compared to the benefits on the other side.” —Daniel Yerger
In June 2019, Daniel Yerger realized it was time to start his Registered Investment Adviser firm and leave behind his independent broker-dealer/RIA. He was already having discussions with peers about the virtues of a fee-only practice and was having difficulty rationalizing doing commission-based work. Then during a practice management webinar hosted by his broker-dealer, Daniel shared an article from popular advisor blogger Michael Kitces to get the guru’s take. When the coach couldn’t even pronounce Michael’s name correctly (”Kitscheese?”), he knew it was time to break away.
Five months of planning later, Daniel gave notice to his broker-dealer. Within two months, he and his only employee, an associate planner, successfully moved 100% of their clients to the newly formed RIA. While the transition was a success, he had no idea how much faster his business would grow as an RIA than before - and growth was explosive. Revenue has nearly tripled in less than three years.
“The blue ocean of planning is huge,” says Dan.
"Since launching MY Wealth Planners, the firm has been growing at 80-90% per year."
This is a phenomenal growth rate compared to before. The hunger for true fiduciary planners has been enormous.”
The client growth and increased revenue have been great, but the bonus is that Daniel can work less than before due to better technology and automated workflows. “Tools like digital account opening, automated rebalancing, and even compliance resources available online have saved me a huge amount of time.”
Start planning before starting a new RIA
Whether you’re part of an Independent broker-dealer, like Daniel, or a wirehouse or bank, you often hear all the reasons you shouldn’t start an RIA:
- It takes $100M or more of AUM even to consider having your firm
- The compliance burden is too complicated and expensive
- You’ll spend too much time trying to put together a tech stack
All of this, of course, isn’t surprising considering the source. Starting a Registered Investment Advisor has never been more accessible or affordable (under $10,000 in Daniel’s case).
Here are a few tips from Daniel to set yourself up for success:
1. Talk to people outside of your current firm.
As Daniel put it, existing RIAs that “have already broken out of prison” are more than willing to share their experiences.
2. Do your due diligence.
Read articles from unbiased sources. Talk to custodians and technology vendors to find the best fit for you and your clients. The freedom to truly build a best-in-class experience for you and your clients is one of the best parts of forming your firm.
3. Look at your economics, and get yourself prepared.
Daniel started tapering off commission-based work well before making his move to RIA. He knew he’d have more profits from day 1.
4. Set client expectations.
Daniel didn’t say he was leaving but started talking more with clients about transitioning to a full fiduciary, fee-only model.
5. Work with a compliance consultant.
It’s possible to do it alone, but Daniel used a consultant to help with all of his document and filing requirements, significantly reducing the time and stress of filing.
6. Do some pre-work to make future account transfers easier.
Moving direct business accounts (such as mutual funds) to ACAT eligible brokerage accounts will save a lot of time after launching your RIA. In Daniel’s case, once he started moving clients, he had 100% of accounts fully transferred within 12 days!
7. If eligible, take broker protocol information with you.
This entitles you to take five items of client information with you to your new firm: 1) client name, 2) client address, 3) client phone number, 4) client email address, and 5) account title of the clients you served. Having this information well organized will make communicating with clients and moving their accounts to your new custodian easier.
Suppose you’re already an independent advisor like Daniel. In that case, you already own your equipment and office space, take care of your payroll and benefits, and have all your office-related vendors in place, such as internet service providers. This will make the move to Registered Investment Advisor especially easy for Independent Broker-Dealer advisors.
Is it worth it to start your own RIA?
“100%, without hesitation”, according to Daniel. “The system you are creating for clients is truly best for them.”
There are reasons an advisor might want to defer the move to RIA, per Daniel, such as if your fee revenue isn’t high enough to sustain your business or personal needs. But other than that, his only wish is he’d have moved sooner. While everyone’s experience is different, we can’t wait to hear your breakaway story.
Are you thinking of starting your Registered Investment Adviser?
If you’re an advisor looking to start your own RIA and have questions about cost, timing, and how to ensure a smooth transition, let us know. Over 1,200 RIAs have used Altruist as their all-in-one custody solution. Our transition experts are happy to share best practices in complete confidence to make your move to true independence as successful as possible.
