Affiliated Advisors, an Osaic independent broker/dealer supervisory jurisdiction, has a new membership model for fee-only RIAs.

OSJ provides its current roster of 50 firms — approximately 100 advisors overseeing $4.5 billion in assets under advisement — with business advisory, trading, compliance, technology and marketing support. It has traditionally focused on smaller shops, with one or two advisors who appreciate the more “personalised” level of service model, including well-regarded transition and succession support programs. It's the fastest-growing CSO in Osaic, executives say.

Now, they see an opportunity to bring the same advisory service model to independent advisors who don't have a FINRA license and don't have a brokerage business at all.

The target market is firms that fall in the industry's so-called “muddy middle” — RIAs with $100 million to $250 million in AUM, said Rita Robbins, founder and president of Affiliated Advisors.

These firms increasingly find they are too small to receive a high level of service from larger custodians, but cannot easily afford to build a self-operating firm, she said.

Advisers drawn from running their own RIAs become too immersed in the business, Robbins said, as operating costs rise, new SEC regulations are introduced and existing ones become more onerous, technology needs escalate and potential clients demand more personalized and more expensive. services and experiences.

“Many advisors have been unpleasantly surprised that running their RIA hasn't been the panacea they thought it would be,” she said. “All it takes is one SEC audit and you and your employees are locked in a conference room for days.”

The new engagement model sits atop Osaic's RIA platform, now overseen by Ed Swensen, co-founder and former COO with Dynasty Financial Partners who joined Osaic last June. In 2023, Osaic grew recruiting in the RIA channel by 178% compared to the previous year, according to the company. The firm's wealth services business has custody relationships with Pershing National Financial Services and Fidelity.

RIAs joining Affiliated Advisors will operate under Osaic's Corporate Form ADV, retain their brand and retain 100% ownership in their firm, an increasingly rare feature in the industry, Robbins said. Most crowdfunding models in the RIA space lean toward equity swaps, she said, increasing the adviser's liabilities and exposing themselves to the risks of larger business models.

There are membership fees, but those costs are “de minimis” when compared to running an RIA on your own, she said. In return, advisors receive access to Affiliated Advisors' services and operating platform, including trading, technology, marketing support, compliance, business consulting and continuity opportunities.

While independent broker/dealers have accommodated hybrid advisors and their fee-based business for years, most of the larger ones have moved to build service models for simple, no-brokerage RIAs, the fastest-growing channel in the wealth management space. according to Cerulli Associates research. That group includes Osaic, as well as LPL, Cetera, Commonwealth, Raymond James and Cambridge.

According to the latest Cerulli Edge report, released earlier this week, nearly a third of IBD advisors have considered opening their own RIA in the past year. These advisers typically seek higher profits from the business and a greater chance to build enterprise value in the operation, the research group said.

However, options to support such a move continue to evolve. Nearly four in 10 of these advisors, or 36%, said they would be open to maintaining a relationship with their current broker/dealer's RIA. Slightly fewer said they would need more understanding of the different service models available before making a choice.

“Firing a B/D employee is a daunting task for advisors who have spent their careers with this type of affiliation,” Andrew Blake, Cerulli's associate director, said in a statement. “The added responsibility and unfamiliar economy leave many new RIAs feeling spread thin and unable to grow their practice as they had hoped.”