Broker Dealer: Startup Process

[MBrink]

Can anyone clarify why you can register with a state as a non-FINRA member? I was under the impression that any broker-dealer needed FINRA membership in order to do transactions, so why would they offer a fee for non-members?

 

[Tahoe Ray]

Can anyone clarify why you can register with a state as a non-FINRA member? I was under the impression that any broker-dealer needed FINRA membership in order to do transactions, so why would they offer a fee for non-members?

If you want to solely give "investment advice" without receiving commissions from the sale of products, you can set up a registered investment advisor (RIA) firm (or join one already in existence) with the state (or the SEC, depending on your assets under management (AUM)) and charge fees instead. Those fees can be a % on AUM, hourly, for a specific project or for creating a financial plan. The RIA (and its Investment Advisors) is not regulated by FINRA (yet) as they are not a broker/dealer.

Some advisors wear two hats and act as an Investment Advisor in managing assets and as a broker/dealer representative in selling insurance, REITS, bonds etc.

 

[DHK]

Can anyone clarify why you can register with a state as a non-FINRA member? I was under the impression that any broker-dealer needed FINRA membership in order to do transactions, so why would they offer a fee for non-members?

You seriously don't know anything about how the investments/securities business is regulated.

I stand by my original statement: Don't start up a new firm without having worked for one.

Remember this phrase from Forrest Gump: "Stupid is as stupid does"?

How will you know what "stupid is" until you work for a firm that will tell you what it is so you know how to avoid it.

You are taking a huge liability if you think it's a good idea to just "become an indy RIA or B/D" without having ever worked for one.

Find a firm.
Get licensed.
Get trained.

Hell, you can do that at WFG or Primerica. I don't necessarily like these firms, but you can get the licensing and introduction to the industry that you are sorely lacking.

 

[Norwayguy]

You seriously don't know anything about how the investments/securities business is regulated.

I stand by my original statement: Don't start up a new firm without having worked for one.

Remember this phrase from Forrest Gump: "Stupid is as stupid does"?

How will you know what "stupid is" until you work for a firm that will tell you what it is so you know how to avoid it.

You are taking a huge liability if you think it's a good idea to just "become an indy RIA or B/D" without having ever worked for one.

Find a firm.
Get licensed.
Get trained.

Hell, you can do that at WFG or Primerica. I don't necessarily like these firms, but you can get the licensing and introduction to the industry that you are sorely lacking.

The above post is excellent advice. There is also a good chance after working for a firm and if you ask becoming familiar with the added resposibilities of just being a branch you might decide your plans are better without the B/D RIA hassles.