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Cambridge, Commonwealth see reverse breakaways due to compliance fears

Some IBDs are morphing into Super RIAs that make money by charging for oversight of fee-based assets

Author Lisa Shidler March 7, 2011 at 1:29 PM
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Eric Schwartz: The SEC and FINRA obviously didn’t ask the right questions when they were in Madoff’s office. So, there’s a much higher burden (now) and they don’t go by the same cook book.

Eric Schwartz


Mike Berry


Lloyd Painter

Frederick Van Den Abbeel

Frederick Van Den Abbeel

March 7, 2011 — 8:24 PM

I wonder how much of the necessity to abolish the Advisors own RIA firm is predicated with their requirements of being dually-registered (i.e. FINRA and SEC or State) as opposed to those RIA firms which are not FINRA affiliated Registered Representatives?

How much additional work is required of the Advisor to maintain a dual relationship and is the extra regulatory burden the reason why some choose to close their own RIA firm?

RIABiz — have you seen any studies in regard to this?

Brooke Southall

Brooke Southall

March 7, 2011 — 9:49 PM

Hi Fred,

I’m not sure of how much extra work is required as measured by hours but if advisors’ willingness to spend is any indication then the Pershing study just published on hybrid RIA economics and the IBD — and covered in this article http://www.riabiz.com/a/5757001 should be helpful.

In addition, today’s article surveying compliance experts on costs also gets at your question: http://www.riabiz.com/a/5811995

It’s the proverbial $64,000 question. Is the hybrid model just fashionable right now and people are justifying it over renewed compliance concerns or is it really part of an ambidextrous, wealth-management-minded future based on more fundamental structural advantages?




March 11, 2011 — 11:21 PM

“His firm manages about $80 million in assets and of that he oversees about $55 million. The firm has about 800 clients whose average assets are about $150,000.”

800 clients with 150k average assets = 120 million assets under mgt (*not* the 80 million reported).

This is basic math people…

Lisa Shidler

Lisa Shidler

March 12, 2011 — 9:18 PM

Hey cas127 – great question. I chatted with Mike this morning and he ironed out a few things.

The firm has 800 clients but in that group many of them are husbands and wives, relatives, etc.. who have a number of smaller accounts.

So, he estimates in total there are about 500 households whose assets range from $150,000 to $200,000. That puts total firm assets at about $75 to $100 million. He estimates total assets are more than $80 million – but not that far from $100 million.

Thanks for your feedback.


Mentioned in this article:

Commonwealth Financial Network
RIA-Friendly Broker-Dealer, Tech: Other
Top Executive: Wayne Bloom

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