[quote=Morphius]I just have time for a quick response now, so this might be a bit rough.

[/quote]

Thank you for the great response.  I only have one client with c-shares and I don’t even get paid on her at ML (<$100k now).  All the rest is MLPA fee-based (used to be MLUA).

As of now, ML has not made the decision for me.  I’ll keep investigating my options and make a move if forced or if I am sure that it is the best time to do.

Alias

[quote=Alias]
As of now, ML has not made the decision for me.  I’ll keep investigating my options and make a move if forced or if I am sure that it is the best time to do.[/quote]
Just realize that if you simply wait for ML to make the decision for you, you will not have the time at that point to start an RIA so will have eliminated that as a practical option.   Besides the planning to know what you want to do and how, there is the time it takes to establish the legal entity and register with your state, not to mention making arrangements with a custodian, to name a few.

My only point is you cannot simply wait for a b/d to can you and still hope to be able to react quickly enough to then start an RIA.  That option will take too long to retain the lion’s share of your clients.  So if you think that may be an option you want to leave open, you would need to continue to act and prepare now.  It’s clear from the way ML handled the last cuts that you won’t have much advance warning, beyond the obvious fact that they are cutting FAs more aggressively. 

Don’t wait for your house to be on fire before gathering water.

[quote=CDO Squared]dont go to message boards
[/quote]
I guess that is one of those ‘do as I say, not as I do’ things?

[quote=Morphius]

[quote=Alias]
As of now, ML has not made the decision for me.  I’ll keep investigating my options and make a move if forced or if I am sure that it is the best time to do.[/quote]
Just realize that if you simply wait for ML to make the decision for you, you will not have the time at that point to start an RIA so will have eliminated that as a practical option.   Besides the planning to know what you want to do and how, there is the time it takes to establish the legal entity and register with your state, not to mention making arrangements with a custodian, to name a few.

My only point is you cannot simply wait for a b/d to can you and still hope to be able to react quickly enough to then start an RIA.  That option will take too long to retain the lion’s share of your clients.  So if you think that may be an option you want to leave open, you would need to continue to act and prepare now.  It’s clear from the way ML handled the last cuts that you won’t have much advance warning, beyond the obvious fact that they are cutting FAs more aggressively. 

Don’t wait for your house to be on fire before gathering water.
[/quote]

+1 on the above.

I’ll reiterate my suggestion that you investigate the avenue of indy b/d’s that will allow you to come in ‘turnkey’ under their corporate RIA and will also facilitate traditional commission business and insurance business.  This will be something you can set up more quickly, and also offers more ways to generate revenue…this could be important since you have a somewhat smaller revenue base.

If you work at ML, you are not a million dollar producer, and you don’t have a very firm “plan B,” that is not very smart.   

The reason you have a CFP is to impress your colleagues (well, and maybe know something about the crap you sell), so the one way that psychologically immature people react is to ridicule what they don’t have — pretty basic human behaviour – though its really a display of repressed jelousy.

But as to your real question about starting an RIA – if you start right now you’ll be able to – maybe – open for business in about 9 months. As you have virtually no assets to speack of you will find it difficult to find a BD, or liability insurance. Good luck.

But as to your real question about starting an RIA – if you start right now you’ll be able to – maybe – open for business in about 9 months.

A lot of people waiting to get their heads chopped off. The circumstances are all different but it’s a similar tune.

Anyone else considering this option should read over:
http://www.schwabinstitutional.com/public/html/silegalwhitepaper.html

Is there a way to get a copy of my ML employment contract without causing suspicion?

If I were to go the RIA  route, wouldn’t ML find out or need to be notified when I actually start the process of setting up an RIA? 

Would an option be to get the process started under another person’s name (wife or family member) and then change it over to my name?  If that is a possibility, how far could they get without having the 66?

Alias

I can’t speak to your employment contract issues.



But, on your other questions - yes, there is a way to create an RIA without having to inform ML. Ordinarily, yes, you would have to notify them, since you would be forming an outside business and would have to disclose this fact. But if you work closely with your legal counsel, they MAY have the ability to create, apply for, and own your RIA prior to you assuming the ownership of the RIA immediately following your resignation.



Once we resigned from our former firm, we accepted the ownership of our new RIA. We did NOT accept ownership prior to our resignation. This was arranged with our attorney, and I would strongly suggest that you work through legal counsel on this matter. I don’t think it’s a good idea to involve your family in this matter. The SEC, however, has issued some comments that they are cracking down on this behavior… not sure, but I’ve heard some rumblings.



We worked with Hamburger Law firm on this issue - http://www.marketcounsel.com/svc-new-ria.html



One thing that I’ve heard recently, is that some RIAs are a part of the ‘protocol’. It might be a worthwhile question with your legal counsel concerning having your future RIA become a part of the protocol prior to your resignation. This might help your situation.



C

Anyone else considering this option should read over:http://www.schwabinstitutional.com/public/html/silegalwhitepaper.html

Now you are beginning to understand why I said spend some time checking out the Schwab & Fidelity institutional web sites - not because I am tired of writing the same info over and over again (although there IS that) but because there is a lot of very useful information there, more than anyone can share here!

[quote=Alias]Is there a way to get a copy of my ML employment contract without causing suspicion?[/quote]

Yes. Look at the copy in your home file that you kept from the beginning, since anyone who signs important employment agreements surely ought to be bright enough to keep a copy of what they signed, right?



OK, if you are among those many who for whatever reason did NOT keep a copy, you should kick yourself in the ass and recognize that your options for getting a copy without raising suspicion are limited. You can come up with excuses to ask for a copy, but it will almost certainly raise a big red flag and your BOM will be advised. Are there any other FAs who joined ML about the same time as you did? Perhaps you can get a copy from them. Not perfect but it might allow an attorney to have a clue as to what agreement you might have signed.

[quote=Alias]If I were to go the RIA route, wouldn’t ML find out or need to be notified when I actually start the process of setting up an RIA? Would an option be to get the process started under another person’s name (wife or family member) and then change it over to my name? If that is a possibility, how far could they get without having the 66?Alias[/quote]

You have the right idea. The database of those registering for an RIA, and even those incorporating with a state, are public and B/Ds do regularly check those so you do NOT want your name on the original documents. You are correct that the basic strategy is to have everything registered in another’s name (ideally someone who does not share your last name, and may even be your attorney) and then simply transferred into your name the day you leave, once you have formally resigned. Legally, you need to avoid owning and/or operating an OBA while still employed at your former B/D.



This is variously referred to as an ‘undercover’ strategy, or similar name. Not hard, although there is some legal work/fees involved since you effectively need to double file. The details vary on whether you would be registering with your state (under $25 MM AUM within 90 days of approval)or with the SEC (over $30 MM, with $25-30 MM being optional state or SEC).



The point is paying for proper legal help in navigating the path is money well spent, as the particulars for a given situation will vary depending on your circumstances. Just know you’ll want to use and undercover strategy if you’re leaving a wirehouse.

One thing that I’ve heard recently, is that some RIAs are a part of the ‘protocol’. It might be a worthwhile question with your legal counsel concerning having your future RIA become a part of the protocol prior to your resignation. This might help your situation.

C

Why wouldnt all the independent B/D’s  not join the protocol if its simple.
I spoke iwth a large well known indie b/d last week and asked the question. Was told they are not part of the protocol. Doesnt this present all kinds of potential issues?

Brand new article… worth reading.



From my understanding, some firms didn’t feel the need to sign it. It used to be an exclusive pact between just a few firms… If your firm was losing more advisors than you were gaining, it limited your right to damages.



This is a good Q and A session that answers many good questions - brand new… just read it this evening.



http://www.investmentadvisor.com/Issues/2009/February%202009/Pages/Experts-Corner.aspx



C

Thank you for all of the information.  So far joining an established RIA seems to make more sense…at least for the next year or so.

Some places claim 90% payout but from what I’ve heard they nickle and dime you down to much lower.  What is a more realistic payout (not taking in account office space or support staff)?

Alias

People giving you advice to ditch your CFP and become a salesperson and "sell what clients want to buy" are the reason this industry gets a bad reputation.  Comments like that show they lack the integrity and honesty required to represent a client in these volatile economic times.  Next thing you know, they will be telling you to forget about a**et allocation and modern portfolio theory and just sell whatever a client asks for.   Do not listen to that kind of advice.  You owe it to clients to provide sound advice and protect them from themselves.

[quote=NewRep73]

People giving you advice to ditch your CFP and become a salesperson and "sell what clients want to buy" are the reason this industry gets a bad reputation.  Comments like that show they lack the integrity and honesty required to represent a client in these volatile economic times.  Next thing you know, they will be telling you to forget about a**et allocation and modern portfolio theory and just sell whatever a client asks for.   Do not listen to that kind of advice.  You owe it to clients to provide sound advice and protect them from themselves.

How’s a**et allocation and MPT been working the last 18 months?

It's frustrating to encourage integrity and see others who seem to think the best thing for a financial advisor to do is to ignore diversification and sell whatever the client likes, regardless of whether it is appropriate for their risk profile.