What this is (and isn’t)
A framework to compare broker-dealer payout to RIA profitability—including the costs that quietly grow inside the BD model and the costs you must own in independence.
Note: This is educational and not legal advice. Treat it as a primer so you can ask better questions of counsel.
Key takeaways
- Payout is a revenue share; independence is a P&L.
- The biggest ‘hidden cost’ is often constrained optionality (marketing, pricing, service model).
- Compare take-home after all costs, not gross payout.
- Independence improves economics most when you design a scalable operating model.
- Build a 12-month transition budget before you decide.
Payout vs profit (what to compare)
Start with gross revenue, then subtract everything required to produce it. In a BD, many costs are implicit. In an RIA, many costs are explicit.
Hard costs you must model
- Compliance support
- Tech stack (CRM, portfolio accounting, reporting)
- Staffing and payroll burden
- Insurance, cybersecurity, archiving
Soft costs advisors overlook
- Time cost of friction
- Limits on marketing and niche positioning
- Constraints on fee design
- Equity limitations in succession
Disclosure
RIA Confidential is an educational resource center. Nothing on this page is legal, tax, or compliance advice. Consult qualified legal and compliance professionals for guidance specific to your circumstances.
