What is a Hybrid RIA?

What exactly is a hybrid RIA and why should an advisor want to become one?

Hybrid RIAHybrids seem to be all the rage these days. And I’m not talking about the fleet of hybrid Toyota Priuses[1] outside your local Whole Foods or the pluots (plum crossed with apricot) or rabbage (cabbage crossed with radish) inside the trendy produce section. One of the most buzzed about hybrids actually comes from the advisory sector of the financial industry: the hybrid RIA (registered investment advisor).

Without getting into all the nitty-gritty details, here’s a simplistic definition of a hybrid RIA: an advisor who is registered with both a broker-dealer and a registered investment advisor. This dual-registration gives the advisor the opportunity to maintain a “hybrid” practice, meaning the advisor can have both a fee-based and commission-based practice.

The RIA channel has truly matured over the years and is rapidly changing—giving advisors more options than ever before. Given the multitude of available options, there’s no cookie-cutter approach to becoming an independent RIA. This flexibility and freedom is a huge selling point for advisors making the transition to go independent as an RIA. There’s really no right or wrong way to going independent—and that’s the beauty of it: since different RIA models will appeal to different personality types and professional aspirations, you can choose the model that fits you best.

According to Cerulli Associates, a firm that provides comprehensives data and analytics for the global financial services industry, the fastest growing segment of the RIA channel is the hybrid RIA channel.[2]

While increasingly popular, the hybrid RIA model is not right for every advisor. Before making a decision about what type of RIA model is right for you, it is important to thoroughly analyze the pros and cons of each model as well as have a clear understanding of your personal and professional goals and then choose the model that is the best fit for you.

As for the hybrid RIA model, here is a brief summary of just some of its benefits and why an advisor may want to be a hybrid RIA:

  • The advisor can maintain his or her independence
  • The advisor gains the flexibility and ability to offer clients both commission-based and fee-based services
  • The advisor retains complete control over the advisory products to offer clients, which gives the advisor more freedom to choose products that best meet clients’ needs.
  • The advisor can still leverage the broker-dealer’s compliance and technology infrastructures as well as a custodian’s services and technology offerings
  • The advisor has more decision-making freedom in various operational areas—the advisor can choose one or more custodians, have complete control on making decisions about how to invest for clients, and leverage increased pricing flexibility

As already mentioned, there is no one-size-fits-all approach and advisors must select a model that best fits their personal and professional needs and wants. While the hybrid RIA model offers many benefits and is an increasingly popular option, it’s not necessarily right for every advisor and independent RIA.

The hybrid RIA platform may not be right for you if:

  • You prefer to specialize in a single product or niche practice area
  • You prefer not to deal with the challenge of having separate clearing firm relationships and custodians
  • You don’t have the desire to own your own business and take on everything such ownership entails
  • You think that juggling two different regulating bodies and the ensuing overriding compliance issues is not worth your time or effort, which you would prefer to use for client prospecting activities
  • Your current commission-based fee business makes up the overall majority of your assets and revenues and you do not foresee this changing in the future


For more information on Summit Brokerage Services and our independent financial advisors, visit www.joinsummit.com or contact us at (800) 354-5528. Let us show you why we were voted as the number one boutique independent broker dealer firm in the country!

About Summit Brokerage Services

Summit Brokerage Services, Inc. is part of Cetera Financial Group®, a leading network of independent retail broker-dealers. Summit Brokerage provides a broad range of securities brokerage and investment services to primarily individual investors. Summit Brokerage also sells insurance products, predominantly fixed and variable annuities and life insurance through its subsidiary, SBS Insurance Agency of Florida. Summit Brokerage also provides asset management services through its investment advisor, Summit Financial Group, Inc.

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[1] If we’re going to get technical about it, the plural form of “Pruis” is not actually “Priuses” but rather “Prii”. In fact, Toyota even held a “Prius Goes Plural” campaign that challenged the public to help Toyota decide on the plural nomenclature of Prius. The winner: “Prii”. See http://toyotanews.pressroom.toyota.com/releases/toyota-announces-the-plural-of-prius.htm

[2] https://www.summitbrokerage.com/whitepaper/NavigatingtheRIALandscape_Final_Summit2.pdf (See p. 2)

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