NEW YORK, April 29, 2013 /PRNewswire/ -- NFP Advisor
Services Group, which provides technology, service and asset
management platforms to financial advisors, including RIAs and
hybrids, and is a business segment of National Financial Partners
Corp. (NYSE: NFP), a leading provider of benefits, insurance and
wealth management services, today published the results of a study
exploring the unique structural challenges and opportunities faced
by financial advisors considering whether the independent or
corporate RIA structure is most profitable.
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James Poer, president of NFP
Advisor Services Group, said, "As financial
advisors seek the best path to position their
practices for long-term, profitable success, a major consideration
is whether to affiliate with a corporate RIA or
to establish and run an independent RIA. Both choices offer
meaningful benefits and associated challenges, but ultimately the
best structure will vary by practice and can only be assessed by
closely evaluating the economics and operational setup of the
practice as well as the personal preferences of the firm
principals."
The study, commissioned by NFP Advisor Services Group and
produced by leading independent research firm Aite Group, reveals
that the choice to be an independent or corporate RIA can have
long-term effects on a practice, including the potential to
influence the practice's valuation at the time of a sale or during
a succession period. It is important for advisors to understand the
differences between corporate and independent RIAs, and the many
pros and cons, including costs and benefits, of each structure.
- Profitable independent RIAs require scale: Independent
RIAs can achieve profitable scale once they have more than
$200 million in assets under
management, assuming business operations and expenses are managed
efficiently. The tipping point could be even higher for advisors
who lack expertise in business process and technology.
- Revenue generation at corporate RIAs is comparable to that
of independent RIAs: Revenues for advisors with a corporate RIA
averaged $1.2 million vs.
$1.3 million with an independent
RIA.
- Advisor income favors corporate RIAs for the majority of
practices: When comparing annual income, advisors with a
corporate RIA earn more on their books of business, particularly
those with a book over $100 million
but less than $1 billion.
- Nonfinancial costs of independence: Compared with
corporate RIAs, independent RIAs spend more time – and more
resources – on compliance, technology and other operational aspects
of the business. Advisors who must also focus on these aspects
sacrifice time they could spend on prospecting and sales.
Poer concluded, "NFP strongly believes that both the corporate
and independent models can provide the right solution for an
advisor, depending on the firm's size and business mix, which is
why we are steadfastly committed to providing support for both
models. However, it is critical for advisors to understand the
distinctions between the structures, and consider their personal
preferences and priorities so they can make the best decisions for
long-term success."
View the complete results of the study at
www.nfpasg.com/tippingpoint.com.
About the Study
Aite Group's independent study "The RIA Tipping Point: Corporate
or Independent" is based on a survey of 161 financial advisors and
interviews with advisors, evenly split between those affiliated
with a corporate or independent RIA. The survey was limited to
advisors who currently have, or originally had, a broker/dealer
affiliation.
About NFP Advisor Services Group
NFP Advisor Services Group, a business segment of NFP, serves
independent financial advisors whose clients include high net worth
individuals and companies by offering broker/dealer and asset
management products and services through NFP Securities, Inc.,
member FINRA/SIPC, and NFP IndeSuite, Inc. NFP Advisor Services
Group attracts financial advisors seeking to provide clients with
sophisticated resources and an open choice of products.
About NFP
National Financial Partners Corp. (NYSE: NFP) and its benefits,
insurance and wealth management businesses provide diversified
advisory and brokerage services to companies and high net worth
individuals, partnering with them to preserve their assets and
prosper over the long term. NFP advisors provide innovative and
comprehensive solutions, backed by NFP's national scale and
resources. NFP operates in three business segments. The Corporate
Client Group provides corporate and executive benefits, retirement
plans and property and casualty insurance. The Individual Client
Group includes retail and wholesale life insurance brokerage and
wealth management advisory services. The Advisor Services Group
serves independent financial advisors by offering broker/dealer and
asset management products and services. Most recently NFP was
ranked eighth on Business Insurance's 100 Largest Brokers of U.S.
Business; second on Business Insurance's Largest Agents and Brokers
Headquartered in the U.S. Northeast; and as the ninth Top Global
Insurance Broker by Best's Review. It operates the third largest
executive benefits provider of nonqualified deferred compensation
plans by total clients as ranked by PlanSponsor; operates a top 10
independent broker/dealer as ranked by Investment Advisor; and has
three advisors ranked in Barron's Top 100 Independent Financial
Advisors. NFP is also a leading independent life insurance
distributor, according to many top-tier carriers. For more
information, visit www.nfp.com.
About Aite
Aite Group is an independent research and advisory firm focused
on business, technology, and regulatory issues and their impact on
the financial services industry. With expertise in banking,
payments, securities & investments, and insurance, Aite Group's
analysts deliver comprehensive, actionable advice to key market
participants in financial services. Headquartered in Boston with a presence in Chicago, New
York, San Francisco,
London, and Milan, Aite Group works with its clients as a
partner, advisor, and catalyst, challenging their basic assumptions
and ensuring they remain at the forefront of industry trends. Aite
Group is not affiliated with NFP or its subsidiaries.
SOURCE NFP