want a mix of fee-only and commission
income. They also like the advantages
that a deep-pocketed provider can confer, from integrated technological platforms to compliance tools to marketing
and research resources.
“People who have not spent money
on technology will get eaten alive by
the SEC over compliance issues,” says
Jeffrey Thomasson, founder of this
year’s No. 1 firm, Carmel, Ind.-based
Oxford Financial Group. But strictly
independent RIA firms like Oxford,
Shepherd Kaplan and Aspiriant view
associations with B-Ds as deals with the
devil. “So many firms create a conflicted
structure internally,” Shepherd says.
“It’s [re-creating] the sins of the industry
out of which the RIA industry grew.”
MANAGEMENT SUCCESSION
As it happens, the four firms that sit at
the top of FP’s list of the largest RIAs
have made long-term commitments to
a strict model of independence. Each
has chosen an ownership structure
that many other RIAs would find both
exotic and burdensome to institute and
maintain: complex internal succession
plans that pass ownership to younger
partners.
These plans limit the upside that
founders and early partners are likely to
reach in selling all or a portion of their
firms to outsiders. And while offering
a lucrative opportunity to younger
partners, the plans also place a steep
burden on them. Newer partners must
typically borrow substantial sums to
incrementally purchase equity owner-
ship stakes over the years.
