A new law firm is aiming to offer legal counsel for mid-level RIAs who need guidance in compliance oversight without the higher costs of larger practices.
The newly announced RIA Lawyers consists of three attorneys previously at the law firm Stark and Stark, including Max Schatzow, an attorney and founder of the compliance blog AdviserCounsel. The firm’s looking to work with RIAs ranging from $100 million to $10 billion in AUM, and its ideal client is sizable enough to have a dedicated chief compliance officer (or chief operating officer taking on the additional role) but may not be in the financial position to attract significantly experienced help.
“If you’re hiring a CCO at Morgan Stanley, they’re going to command quite a salary. If you’re hiring a CCO at a mid-market RIA or wealth management firm, you’re not going to have the same budget,” Schatzow said. “We bring our sophistication and knowledge, and we can help work with a CCO or COO who’s dual hatting and really make sure they’ve got their compliance program buttoned up.”
Schatzow believes that there simply aren't enough viable options for clients at this level.
“There’s definitely a small handful, and all the New York firms will cater to the bigger (wealth management) firms, but their guidance is $1,500 to $2,000 an hour, and those rates are just exorbitant for a middle-market RIA,” Schatzow said. “So the market for lawyers who are experienced and reasonably affordable is quite small."
In addition to Schatzow, the firm consists of attorneys Cary Kvitka and Ryan Walter, who collectively have more than 30 years of experience. All three attorneys are licensed to practice in New Jersey, while Kvitka is additionally licensed for Pennsylvania, and Schatzow likewise in New York. The firm can act as an outsourced CCO and general counsel, with compensation structures varying from fixed fees depending on the scope of services to an hourly rate of $450.
From a compliance standpoint, RIA Lawyers’ offerings include advisor registration and Form ADV drafting, as well as annual reviews, mock exams and defense in regulatory exams, while legal services include employee transitions, defense before regulatory agencies, including the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA), and issues involving the Broker Protocol.
Schatzow said he’d always been interested in running a firm and felt the timing couldn’t be better due to an ever-increasing number of RIAs in spite of the recent surge in M&A activity. Though compliance assessments would vary case by case, Schatzow said he would concentrate on ensuring firms are in compliance with both ERISA and retirement account demands out of the Department of Labor and Form CRS mandates from the SEC, as the two agencies have made it clear those will be priorities in the coming year.
