What Is Your RIA Really Costing You?

Sarah Pais, Chief Officer of Compliance & Operations • Jan 03, 2024

Fee Structures for Independent Financial Advisors

Fee charges are arguably one of the most important determining factors an independent financial advisor considers when choosing how to affiliate. While aligning your practice's needs and business structures is essential, exorbitant fees or high costs for services can spell doom for your practice's longevity.

Financial advisors are well-versed in setting client fees for managing their financial portfolios, but what about the fees they should pay their chosen RIA for managing their book's requirements?

RIAs differ significantly in this area with some models mandating the use of their products and services irrespective of advisors' actual needs, resulting in excess expenses for underutilized resources.

At ARC, we recognize the uniqueness of every practice and champion a "pay for what you use" philosophy. Our base affiliations offer payouts ranging from 80% to 95%, contingent on assets under management and investment complexity. This pricing encompasses comprehensive services such as:

1. Handling client account billing
2. Streamlining payroll processing
3. Ensuring compliance supervision
4. Providing mandatory training
5. Furnishing compliance software
6. Acting as an escalation point for custodian issues

Before you opt for an RIA with cookie cutter services to waste your hard-earned money on, many FAs consider an RIA charging dirt cheap fees. Often, these types of RIAs allow you to solely affiliate with them however, they don’t offer support services which can also cost you just as dearly. 

To ensure a fair comparison, it's imperative to account for additional services that might be necessary and add to your overall fees. Some of these can include:

1. Administrative support costs
2. Marketing expenses, including websites, print materials, social media content, archiving, and video production
3. Technology software, such as Orion which is required for all Charles Schwab accounts and optional for accounts held at LPL Financial
4. Client Relationship Management (CRM) System fees
5. Office space rent
6. Errors and Omissions insurance*
7. DBA domain registration
8. State licensing fees
9. Retirement Plan Software expenses
10. Planning Software costs
11. Trading Tools fees
12. Custodian annual account fees

This list is not exhaustive. To make an informed decision, meticulously assess your practice's needs and identify the expenses you are willing to bear.
When you're ready to strategize your budget, ARC is here to provide expert guidance. We can help you navigate the intricate landscape of fee structures and tailor a solution that meets your unique requirements.

**Errors and Omissions is a line item for all advisors. Your affiliation type determines the pricing and whether that is a fee charged by ARC or a custodian.
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