PFI Advisors Releases New Industry Report: “Pursuing the RIA Dream: New Transition Models for Billion-Dollar Breakaway Advisor Teams”

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Report shines a bright light on the high costs billion-dollar advisors are paying to breakaway, while identifying a better model through a consulting approach

Billion-dollar breakaway advisor teams have the scale to start their own RIA without aligning with the national platforms out there.

PFI Advisors (“Pure Financial Independence”) today announced the release of its first industry report on a pressing industry issue: The lack of economically viable options for billion dollar breakaway teams who are looking to transition to independence. The report. “Pursuing the RIA Dream: New Transition Models for Billion-Dollar Breakaway Teams” documents the challenge facing these advisors to breakaway and establish their own RIA firms.

Breaking away from the traditional wirehouse model and establishing their own RIA firm is becoming an ever-attractive model to better serve clients and achieve greater profitability for large wirehouse advisor teams, yet this movement is being slowed due to a lack of economically viable options for transition services.

“Billion-dollar breakaway advisor teams have the scale to start their own RIA without aligning with the national platforms out there,” said Matt Sonnen, CEO and founder of PFI Advisors and author of the report. “They don’t need to give up valuable equity or pay steep basis points just to get started. We have found a better way providing transition services through a consulting model.”

According to the report, “The current independent wealth management aggregator and ‘plug and play’ platforms provide a valuable service, however, the economics of these models break down when applied to billion-dollar firms. These models provide transition services – real estate, office setup, technology, branding, websites – however the aggregators take a percentage of firm ownership and platform providers charge expensive, ongoing basis points on AUM. These upfront costs and contract requirements to pay for services that billion-dollar RIAs can readily acquire on their own become extremely expensive over time.”

As an example, the report compares the aggregator and platform provider costs for a $2 billion breakaway team with $10 million in operating earnings and finds that the aggregator buying 50% equity charges $5 million per year in perpetuity, while the platform provider charging 5 basis points on AUM charges $1 million per year with a minimum 2 year contract.

“What these breakaway advisor teams need is help upfront in order to transition their businesses,” said Sonnen. “Once they have done that, their natural economies of scale take over and they can command the business services, technology and investment platform support they need simply, easily and on a much more profitable and sustainable basis.”

“We wanted to go independent on our own, so we could own 100% of our bottom line and have the flexibility to invest back into the business,” says Ajay Gupta, CEO and founder of Gupta Wealth Management, one of the more high profile billion-dollar breakaway advisors to eschew the national platforms.

The report concludes by identifying a consulting model as a winning solution. According to the report, “Ultimately, what billion-dollar breakaways need in order to make the transition to their own RIA is to build a business footprint for their new firm as well as the RIA infrastructure to become operational. By tapping into the deep expertise and knowledge of industry transition consultants, breakaway teams can pursue their RIA dreams with confidence.”

“Our goal with this research is to facilitate the continued growth of the independent movement so that clients will be better served and advisors will be in a better position to control their own destiny,” Sonnen said.

To read the full report, log onto

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About PFI Advisors

“Pure Financial Independence.”

Today, wirehouse advisors looking to establish their own RIA are looking for guidance and support that won't require them to mortgage their future. PFI Advisors was founded in 2015 to service that unmet need. PFI Advisors provides office infrastructure, RIA infrastructure, and transition services for a simple consulting fee. There is no complicated long-term AUM fee structure or equity stake required to build the firm’s future and provide advisors Pure Financial Independence.

About Matt Sonnen
Prior to founding PFI Advisors, Matt Sonnen learned the ins and outs of the wirehouse model at Merrill Lynch in the late '90s. After leaving Merrill in 2005, he was introduced to the RIA marketplace a few years later when he helped build the infrastructure for Luminous Capital prior to their founding in 2008. As COO and CCO at Luminous, he navigated the technology and compliance challenges as the firm grew from $1.7 billion in assets to nearly $6 billion in less than five years. Luminous Capital sold to First Republic Bank for more than $100 million in 2012, after which Matt headed to Focus Financial Partners in New York City. There, he helped breakaway teams and recently-formed RIAs develop strategic initiatives to benefit from best practices, streamline operations, and improve efficiency before heading back to California to launch PFI Advisors with his wife and business partner.

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Timothy Welsh
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