What Is An RIA Solicitor Agreement?

Описание: Attracting new clients is the lifeblood of any advisory firm.

One of the advantages of transitioning your practice to the RIA model is the increased flexibility (as compared to most captive advisor models) in how you can brand and market your services.

An example is the ability to establish paid referral relationships with, typically, centers of influence.

These are referred to as solicitor agreements.

But not all RIAs are created equal.

In this episode of the Transition To RIA question and answer series I explain when and how such arrangements are typically used.

I'm Brad Wales with Transition To RIA (TransitionToRIA.com). This is episode #132 of my question and answer series where I answer RIA related questions I get from advisors just like you.

What I do: At Transition To RIA we help financial advisors and teams between $50M and $1B understand everything there is to know about WHY and HOW to transition their practice to the Registered Investment Advisor (RIA) model.

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🔹 Transcription of video:

What is an RIA solicitor agreement? That is today's question on the Transition To RIA question and answer series. It is episode #132.

Hi, I'm Brad Wales with Transition To RIA where I help you understand everything there is to know about why and how to transition your practice to the RIA model.

If you're not already there, head to TransitionToRIA.com where you’ll find all the resources I make available from this entire series in video format, podcast format. I have articles, I have whitepapers. All kinds of things to help you better understand the RIA model.

Again, TransitionToRIA.com.

On today's episode, we're going to talk about… what is a solicitor agreement?

That's maybe a term you've heard, maybe a term you haven't heard before. But it is something that is essentially made available to advisors that transition their practice into the RIA model, and it might be something very appealing to you.

So I want to talk about what it is, so you have it on your roadmap for a possible motivation for making a transition with your practice.
A “solicitor arrangement” is a regulatory term. Think of it as a paid referral program.

With your practice you might have centers of influence that you've built relationships with and that you refer clients to them and then they maybe refer clients back to you.

Maybe you have some of those that work very well. Other times, you’ll hear frustrations where some of them are more one-sided in the direction of which direction the referrals are going.

In the RIA space, you're absolutely able to continue to do that and have your centers of influence and have your referral partners that you send folks back and forth to.

What is allowed though, and we’ll get into the semantics to this, if you desire to, you can make some of those referrals a paid referral relationship. The referring partner, the center of influence that is referring someone to you, you can compensate them for that referral.

Perhaps to incentivize them to make those referrals. Perhaps, as we'll get into, because you've sort of joined forces of how you position yourselves together in the marketplace.

It is a solicitor arrangement that enables you to be able to do that, to have those paid referrals.

An example of where this can come into play is maybe you're the financial advisor, you're the RIA, and you have a center influence that has a CPA practice. And the CPA - and this happens a lot, I talk to a lot of CPA practices that reach out to me on this sort of thing - they say… “A lot of our clients ask if we can help them with their investment needs? They have these assets that need to be invested and planned for and all those sorts of things.”

Perhaps the CPA firm doesn't desire to do that in-house, or they just recognize they do not have the expertise or the capacity to do that in-house. And so what they do is they perhaps work with an RIA on a solicitor arrangement. Con't...

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