Hybrid RIA Model

What is a Hybrid Model?

“After extensive due diligence, we believe that Triad’s business model and culture are exactly in line with ours: to provide objective, independent planning and superior service in an entrepreneurial environment that will adapt to the challenging times in which we operate.”  

Bob Carson, Managing Partner

Planning Solutions Group

Maple Lawn, MD

Over $600 million in Assets under Management

Triad Representative since 2010

As the industry continues its shift towards a comprehensive wealth management approach, more advisors are adopting a Hybrid structure for their business. Client’s needs are becoming increasingly complex and Hybrid advisors are best suited to deliver a broad range of advice-driven strategies and solutions. More is expected of advisors today, especially from high net worth clients, and Hybrid advisors can provide sound guidance on all aspects of their client’s financial position, including wealth management and intergenerational transfer.

According to Cerulli Associates:

  • Between 2005 – 2007 the Hybrid RIA market grew at nearly 30% per year, representing the fastest growing segment of the market. 
  • In 2007, total assets amongst Hybrid firms were over $430 billion.  
  • The median asset under management for Hybrid RIA firms was $152 million, compared to $130 million for fee-only practices.  
  • Hybrid firms tend to attract more affluent clients, possess higher client retention rates and generate more revenue than fee-only advisors.   

There are several key reasons why becoming a Hybrid RIA could make sense for your business:

  1. Brand ownership. A primary motivation for advisors to establish their own RIA is to solidify ownership of their fee business and reaffirm their brand. This can result in a more portable entity that may ultimately be worth more upon sale.
  2. In some cases, a fee-based relationship is most appropriate. In others, a commission-based approach is in the client’s best interest. Hybrid advisors can objectively deliver the services and solutions that are most appropriate based on each client’s unique situation.
  3. The unpredictability of the markets have blurred the line between profitability and unprofitability. Because Hybrid advisors can deliver a more complete lineup of solutions than their fee-only brethren, revenue for Hybrid advisors tends to be greater.   
  4. In the wake of the market chaos, more clients are seeking non-correlated, alternative investment solutions, such as Private Equity, Managed Futures and Non-Traded REITs.  Many of these offerings are only available through a commission structure.
  5. Managing a fee-only RIA requires significant size and scale. Hybrid RIAs can leverage their Broker-Dealer for ongoing compliance support, Errors & Omissions Insurance and technology integration. This can result in a significant cost savings for the advisor.   
  6. For advisors who are interested in recruiting, a Hybrid RIA model is an ideal solution for breakaway brokers who want the flexibility of an RIA, but want to maintain their book of commission business.