[00:00:01] Speaker A: Hello and welcome, everyone. I'm Taylor Pankratz, and this is behind the breakaway. Together with my co host, Jason Barber, this show takes you behind the scenes of leaving your captive broker dealer firm and explores the world of RIA independence.
All opinions expressed on the podcast by.
[00:00:22] Speaker B: The hosts and guests are solely their.
[00:00:24] Speaker A: Own opinions and do not reflect the opinion of uptick partners. This podcast is for educational purposes only and is not legal advice and should not be relied upon as a basis for any decisions.
All right, welcome back. Episode 16 of behind the Breakaway podcast. I'm Taylor Pankratz. We got Jason here in studio. And exciting announcement today. We published a book. We published our bridge builder path to independence book, and Jason is showing it off right now. If you're watching the video, I'll show it off in case it's not picking up Jason's voice. So, yeah, we're excited about it. We can't wait to share it with all the advisors out there that are looking into independence, trying to figure out if it makes sense for them, and then answers a lot of the questions of how do you even go about breaking away from your captive broker dealer firm?
[00:01:28] Speaker B: Yeah, I think that, obviously, we love the podcast format, and I think that's how you and I consume information and consumed information leading up to our breakaway is through just taking in all the information we possibly could on podcasts. But probably that's to some extent, because a book didn't even exist. I think if a book had existed, I probably would have been reading that, too. And so we decided to do both. We've got our podcast episodes. Episode number 16. We're gonna have more episodes coming, obviously, but the book really is very easy. I mean, it can be read in an hour, maybe an hour and a half. What is it, Taylor? 120 pages? Something like that. So it's a very quick read, but I think it's got a lot of our hard fought knowledge, lessons learned that we learned along the way, that I think that an advisor that's thinking about doing this will really benefit from.
[00:02:24] Speaker A: Yeah, absolutely. In the book, it's basically a culmination of all of our podcast episodes, but in a more digestible, instead of you listening to 20 hours of podcast, you can read this book in an hour, and it's going to get you to the same place, which is, does independence. Does Ria independence make sense for me? And answers a lot, and does a lot of the blocking and tackling of answering the questions that every advisor that's going through this process has. And she shines a little bit of light on some of the things that we picked up along the way. Of course, we don't have every single minutia detail in the book, or it would be 500 pages long. But it has quite a bit in there. It's worth anybody that's thinking about breaking away. It's worth their time. It's worth the read. And hopefully, it might not answer every single question you have, but it gives you enough to be dangerous, and it lets you ask informed questions during the due diligence phase of these other places that you might be interviewing of where you're going to go, how you're going to do this, if you're going to start your own Ra, if you're going to roll into an existing RA, if you're going to go to the IBD channel, it at least lets you have some basic knowledge of what, where you're at on the spectrum of how much independence you want, and then what each of these firms are going to do for you in, in what we call the bridge builder path independence, but in maybe a different world, might be what are they going to do from a platform perspective, a transition, how are they going to help me get from point a to point b?
[00:04:03] Speaker B: And are they actually doing it for me or are they just giving me money and then expecting me to do it? And even if they are providing somebody, have they done it before, specifically with this firm?
How many times? And there's just a lot. There's a lot of really minutia details that get into it. And that's what we try to keep it high level in the book, I think. But at least give folks some kind of idea of the questions they should be asking. To your point, I think that's a great way to put it. You read this book at the end, you ought to have a lot more of a solid foundation to be able to ask good questions and expect good answers to those questions when you talk to folks. And if you get a. Huh. Let me get back to you on that.
I don't know about that. That's a good question. Let me get back to you. Guess what that means? That means that they've never done it before, right? Right.
[00:05:01] Speaker A: Or they don't have the answer to your specific situation.
And that's really where there's a tremendous amount of value, in our opinion, is the specific nuances to everybody's situation. Everything, it varies from where you're coming from and to which firm you're going to. But what we're trying to highlight is if you want to follow in our footsteps.
We know firsthand the intricacies and the nuances to leaving the firm that we left and going Ria, if you're going to go from a different firm to IBD, this book might not have a ton of value to you because there's probably a different book or a different podcast out there that you should be consuming on how to go IBD.
But if you're at a captive broker dealer firm looking to go Riadh, this is a perfect book for you because it's going to have questions in there that you don't even know that you need to be asking. It's also going to have answers in there that you can't Google. So this is a great opportunity to and this isn't a money making thing for us. We're willing to give this book out to anybody that that contacts us and says, hey, I'm interested in this book. You can buy it on Amazon and it'll be at your house two days, two days later. Or you can download the Kindle right and get it automatically consumed the information. Or you can reach out to us, go to uptickpartners.com and contact us and tell us you want a copy of the book, and we'll gladly send it to you. This isn't, this is not how we're putting food on the table. This is more about trying to put all the information that we know and have gleaned through this last couple years of being in the RA space and breaking away, trying to put it in a different format that's a little bit more consumable and digestible, instead of you having to listen to a whole bunch of podcasts of us rambling.
[00:06:58] Speaker B: Yeah, I think the podcasts are still a great thing to listen to. And from the standpoint of you really get into some very specific situations, specific minutiae, details on the podcast, whereas in the book, maybe we don't go that deep in the book, but again, I think the book gets you 90% of the way there, and then you can start to feel like, okay, is this what I really, is this what I'm really looking for here, as far as should I be going? Ria maybe, of course, then that's great if you maybe you're like us and you think you want to go independent, but you don't even really know what independent even means. What does that even mean? Or you're like me and you think independent equals independent broker dealer and or which is IBD for short, and this book might totally open your eyes to this idea of, wait a second, there's a whole new world and what does it mean to be a fee only Ria and can I do that? And what are the things I should be thinking about, et cetera. And of course, we're very strongly opinionated that it is the right way to do things. And we don't shy away from that in the book, but we also spell out our reasons for why we believe that.
[00:08:07] Speaker A: So, yeah, 100%, I don't think. I don't think we, and we've had a podcast episode about this, which is, this isn't the channel is not going to be the perfect fit for every single advisor. There's definitely a spot where you should stay a captive broker dealer advisor, and there's a spot where you should go into the IBD channel. And so it's not for everybody, but it is a opportunity for every advisor to at least ask them. Some ask themselves questions on, do I truly want to be a business owner of this business that I'm building?
Do I want to have complete control and freedom on what I invest my clients money in and compliance oversight and marketing ability? And just really, do I want to probably summon up as, do I want to be a business owner or do I really want to just be an employee? Because there's a ton of people out there that want to just be an employee and clock in and clock out, and that's perfect, right?
There's other people that really want to be a business owner. They just don't know how to get from employee clock in, clock out to truly being a business owner. And unfortunately, over time, you become more, at least in the captive broker dealer space. You either need to be the best employee you're ever going to be, or you start to get a little jaded and go, mmm, I wasn't the business owner I always thought I was. And you get this slow progression, which is what's happening across the industry writ large, is that people are becoming more and more. It's becoming more and more obvious to them that they're not business owners like they thought they were, and they're more employees. And so you, they're, they become disenchanted with this idea that I'm clocking in and clocking out every day, and I'm actually not building enterprise value for my family, I'm building enterprise value for this big firm.
And I'm just a number at the end of the day, despite what they make me feel, but I am just a number. I will be easily replaced. They will sub me out if I'm not toting the party line. And for some people they're okay with that. And other people, they find that hard to digest and they try to figure out what do I need to be doing differently if that's the case and this is what the RA channel allows, is the other path.
[00:10:37] Speaker B: Yeah, it's maximum freedom and maximum control. And I think that again, for some people the IBD halfway house is good enough. But you just have to understand that you are still going to be giving up a lot of control, a lot of freedom, a lot of ability to have control over how you invest your clients dollars. You're basically incorporating a third party large company that employs thousands and thousands of people to be the interpreter or the person that sort of dictates what you can and can't do and what their interpretation of the rules are from the SEC or FINRA, et cetera, versus just going straight to it and saying, hey, look, what's the rule book say? What's the rulebook say and what rules do I need to follow? And that's what I'm going to do and I'm not going to, I'm not going to break the rules, but I'm also not going to let the attorneys for this publicly traded company tell me what their interpretation of the rule is because it's going to be an extremely conservative interpretation of the rule.
[00:11:48] Speaker A: Right? Of course. So I think going for sure for the captive broker deal, if people are already in the IBD space, then they already know this to be true. But the captive broker dealer looking at going just to the IBD instead of going full ra, you are, you are basically signing up to move your book twice. You're going to end up moving your book again.
And how do I know this is because that's what all the large IBD advisors are doing is moving RIAA from the IBD channel. And why is that? And this is my opinion, this isn't just, this isn't a rule, but it's my opinion, it's my insight into the industry. And you would know I was at an IBD channel advisor. And so what is happening is that people that are at the IB, their advisors in the IBD channel and the compliance oversight is feeling a lot like the captive broker dealer compliance oversight that they sought to leave. And that's kind of what Jason just alluded to. That's what's going to end up happening as these IBDe broker dealers get larger and larger is they start to do compliance to the lowest common denominator that is just the nature of the beast. Of course that's going to happen. And so it makes, it stands to reason that if you are a large advisor at these IBD channels and you don't want the compliance oversight, you don't want the onerous compliance oversight or the lowest common deny denominator compliance oversight of, you really don't have very many options. You're not going to go to the captive broker dealer channel that's the same or worse. So you're going to be forced to go Ria.
And so what we would encourage people to do is instead of doing that twice and moving your book twice and going through the conversations and the calls and the repapering and everything, my goodness. Instead of doing that twice, just do it one time. Time. And go where the hockey puck is going, or go where your book is going to be a decade from now.
[00:14:10] Speaker B: Yep. Couldn't have said it. Couldn't have said it better myself. On the investment side, I recorded a quick video that I'm going to put on my LinkedIn. There was big news that came out that the NFL officially is allowing private equity investors into the NFL sports leagues. What a huge opportunity for the future of private equity. And I think that you, if you, again, if you are an advisor and you look at the direction of the industry, there is going to be, there is a movement towards, or an increase in asset flows towards private equity investments is becoming a democratized space. And so you should be asking yourself whether or not you may be of the opinion that, hey, I don't want to put my clients money in NFL. I don't want that. All right. My clients don't want that. Okay, great. And that would be fine. But I think it's fair to say that most advisors would like to know that they would be able to, they don't want somebody else deciding for them that you're not allowed to do that, or your clients are not allowed to do that. 100%, you decide that you don't want to do that because you don't think it's good you're in control.
If your large IBD says, sorry, we're not willing, our attorneys say, that's too illiquid, that's too risky. Your client, that's not good for your clients. It's our opinion that's not good. That's not a great place to be. Are you really free at that point? Are you really free or are you just a little bit more free than what you were before?
[00:15:52] Speaker A: Or it's, it may be that or it might just be that they don't want the brand new advisor sitting there with the capabilities of.
You don't let your 16 year old drive the Ferrari.
[00:16:06] Speaker B: Exactly.
[00:16:06] Speaker A: But in this day and age, I think we all can agree that there is no way that they would be allowed to say you're brand new. You can't do this. That sounds like a lawsuit waiting to happen because we live in a world where you can't discriminate based on anything. Yeah, it just isn't possible. And so you have to live by this lowest common denominator. I don't want a lawsuit. I'm not going to make, allow people that have been here longer to do this, do that. It just sets them up for disaster. So what the RA channel allows you to do, like Jason said, it doesn't mean that you put your, you have to put your clients money in this. What it does allow you to do, though, is move up market.
[00:16:45] Speaker B: Exactly.
[00:16:46] Speaker A: Higher net worth clients that want to be able to put that, put their money into things like that. And so it doesn't mean that you have to take your quote unquote smaller, probably the bulk of your book or kind of the bread and butter of your book. It doesn't mean you go and move them out of their index funds and to put them into, all it means is that wouldn't it be nice to be able to offer that as a way to go out and attract higher net worth clientele that are looking to do that without having to get it blessed or try to get some kind of special approval from the compliance team to be like, actually, yeah, we'll let you do it on this one off to try to win some business, which they're not going to do, which they'll never do.
[00:17:28] Speaker B: Yeah, these are events. And by the way, typically these types of investments are available to qualified purchasers, which the SEC sets that regulation. You've got to have a net worth of $5 million to even be eligible to invest money in these types of investments. It is very much something that you're going up market, you're going to some of your biggest prospects that maybe would never have done business with you before, and now you have something different to offer them, and again, only if you want to, but it just is. The principle of the matter is, are you really free? If you don't have the ability to do that because a large corporation says no, are you really free?
The answer is you're not. You're sort of free.
You're able to put your name on the building and you own the equity in the business, and that's great. And I'm sure it's a good step in the right direction, but you still have this less than ideal compliance department probably that you're dealing with, I suspect.
[00:18:37] Speaker A: Yeah. And the reality is, what was a necessity a decade ago in terms of needing a broker dealer, a platform to be able to offer investments, to be able to hang your shingle underneath and go, yeah, I'm ABC wealth Management, but I'm a part of a larger broker dealer that's given me a lot of the infrastructure I need to do to be doing business and to, you know, to be able to just turn the lights on you no longer, that's no longer required because the RIA channel, in the technology that powers all these independent Raas is so much more robust than it was ten years ago, that you no longer need this platform of IBDs or captive broker dealers to help you turn the lights on, to help you do a lot of the back office, a lot of the mundane stuff, so you can focus on your clients. You no longer need them. And in fact, in a lot of ways, they're holding you back. Whereas before, a decade ago, they were the thing that you needed, they were the thing you were leveraging to be able to do business. Now there truly may be the thing that's holding you back from being able to better serve your client, to be able to offer better or at least more or different investment options. And it's an interesting thing that's happening in the industry because it didn't used to be like this. But now with technology evolving so quickly, there's a ton of companies and tons of software out there that is really neat to leverage, to help your, to better serve your clients. But a lot of these are larger broker dealers and things they don't like to introduce a lot of those things because they don't, doesn't play well with all the antiquated technology that they currently have. A lot of these captive broker dealer firms are trying to roll out technology that's existed for 20 years in the space.
[00:20:35] Speaker B: Right.
[00:20:36] Speaker A: It's like antiquated technology in the RA channel. Some of these companies are trying to roll out software that is, is old, whereas the RA channel lets you be so much more nimble. And typically, that being nimble allows you to better serve your clients because, well, take our case, for example.
We weren't, we didn't used to be able to offer estate planning and partner with estate attorneys to be able to offer estate planning to our clients. We didn't used to be able to use tax planning software that allows us to better, give better tax planning ideas to clients. So there's a tremendous level of innovation happening in the finance world. Of course, everybody knows that. And I would argue that a lot of that innovation is geared and aimed towards the RA channel because that's where all of these assets are heading.
[00:21:37] Speaker B: For. Sure. Fintech firms are not innovating for broker dealers. That's not the person that they have in mind, generally speaking, is, I'm going to, I'm going to go try to.
Mainly because it's long time, the sales process has got to be years, whereas to an RA, they can click a button and it's remarkable. The technology that's out there is really unbelievable.
[00:22:01] Speaker A: It is. So when you start to think, okay, where do I want my business to be in ten years? And how sellable do I want my business to be in ten years, you would think, all right, if I'm going to move my book from the captive broker dealer space to some other space, because I want better, I want more freedom, I want more investment options, I want better compliance, I want all these things. I want to be able to better market myself.
Wouldn't it make sense that you would skip over the IBD channel when you've got the hockey puck is going over here? All these other firms are moving from IBD to RA so that when you want, ten years from now you want to go and sell your business, 20 years from now you want to go sell your business. Don't you think it's going to demand a little bit more of a premium if the people buying your book aren't subject to, oh, all the people are all custody at this one place and oh, we actually can't, we have to repaper them to, for them to fit into our RA model. That is not a sellable.
[00:23:06] Speaker B: Yeah, it's just as simple as there are going to be more buyers because there are more raas that can buy it. That's, it's really just that simple. There's more buyers, there's more Bowers comparison.
[00:23:18] Speaker A: Today, and there's going to be even more tremendous amount ten years from now.
[00:23:21] Speaker B: Exactly. So it's just, it's just, it's objectively true that you are going to get a better price when you have more buyers to compete for your business. And so it's, it's just.
Water is wet, the sky is blue. Right. It's just that true. Yeah.
[00:23:39] Speaker A: Supply demand.
[00:23:40] Speaker B: Yeah.
[00:23:41] Speaker A: So anyways, a little bit of a tangent there but basically what we wanted to talk about today is just giving people, letting people know the books out. We aren't trying to have you go and buy it on Amazon. We don't care about that. We want you to, if you want a copy of it, if you want to read it, let us know. We'll send you one. No cost.
Think of this as just our paying it forward to the industry. To the captive broker dealer advisor that's looking for independence. Let us send you one of these.
We'd be glad to. And our hassle free guarantee is that it will be worth your time to read it. I'm a slow reader, and it takes an hour and a half. And you can read it, and you'll at least I know for sure you'll pick up something that you didn't already know about the RA channel, about transitioning, about the things that you should consider when you're transitioning. You might read the book and go, no, I want to say exactly where I'm at. Hey, the book did its job right. It caused you to no longer have either the desire or the idea of transitioning your book, because you read our book, and you can put that to bed and you can be the best employee that you can be. So either way, however it shakes out, it's time well spent to read it. All right, until next time, thanks again. Thank you for listening. We hope you enjoyed the podcast. Please subscribe to our channel. You can find more of our episodes on YouTube, Spotify, and Apple podcasts. And check us
[email protected] where you can learn more about how we help breakaway advisors just like yourself, find independence.
