10 Questions to Measure Fit for an RIA or BD
(I’m Mike Gordon, independent recruiter and transition consultant. I help match successful advisor-owners with better RIAs, BDs, and OSJs. You work with me when you want an experienced advocate to guide you through firm research, vetting, and negotiations. I’m the Advisor’s Advisor.)
Every recruiter talks about fit. It's arguably the most important thing we are trying to accomplish when introducing you to potential firms, but what actually is fit? Fit is not a feeling. It is a set of specific, answerable questions that most advisors have never been walked through before signing with a platform. Some of them find out years later why they should have been.
Here are the ten I rely on most.
1. Does this firm ever compete with its own advisors for business? If the answer includes the platform itself, through an internal RIA, a succession program, or an acquisition arm, you are not just a customer. You are also a competitor. Know that going in. Why do they suddenly want everyone to be W2, and what does that mean for you?
2. What percentage of the firm's revenue comes from advisors vs. other business lines? When advisors stop being the primary revenue source, they stop being the primary priority. I have watched this happen at firms that used to be considered the gold standard. Scale changes the math.
3. What has changed about this platform in the last three years that was not in the original pitch? Every firm evolves. The ones evolving in advisor-friendly directions are comfortable answering this. Pay close attention to how long it takes them to come up with something.
4. Can you walk me through what leaving looked like for an advisor who departed in the last two years? Not a hypothetical. A real example, with real terms. If they cannot produce one, or will not, you have already learned something important. Also, if they flinch, this is the kind of information I have access to and will happily share with you.
5. What does your escalation process look like when something goes wrong at the custodian level? This is where the override either earns its keep or does not. Vague answers here are expensive later. "We have a great relationship with them" is not an answer. Similar to #4, can we talk to real advisors and ask this?
6. How many of your top twenty advisors by production have been here for more than five years? Retention at the top of the book is the real retention number. A firm can post strong overall numbers while losing the advisors that matter most. Ask for the specific list.
7. What happens to my agreement if this firm is acquired? Not if. When. Most firms in the independent space will be involved in some kind of transaction in the next decade. You want to know what your contract says about that before it becomes relevant, not after.
8. When did you last raise fees on existing advisors, and what was the process? The answer tells you how the firm thinks about its relationship with advisors once the business case for being generous has changed. A firm that handled it well will tell you exactly how. A firm that did not will get vague.
9. What is the profile of the advisor who has not worked out here? Every platform has one. The firms that can answer this honestly are the ones worth trusting. The ones that tell you everyone has been a great fit are the ones to be most skeptical of.
10. If I called you with a serious operational problem at 6 AM on a Saturday, what would actually happen? I was on that call this week with a partner at an RIA. Most platforms cannot offer that. You would be surprised how much this one question tells you about a firm's actual culture versus the one in the brochure.
I think in many cases, advisors don't ask questions like these because they either haven't thought of it quite yet or they feel it's too forward to ask. I'm here to tell you, as someone who sits through hundreds of these meetings a year, that they are not going to answer these voluntarily. Trust me, you'll feel a lot better about your decision if you ask them. I'm also here to do the grunt work with you and be an advocate for you along the way.
That is what the Confidential Fit Review is built for. A conversation is discrete, complimentary, and easy to schedule. Click here to schedule a time with me.
— Michael Gordon
themichaelgordon.com