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XYPN Mulls Launch of Corporate RIA

By Jeff Berman

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What You Need to Know

  • Some advisors who would rather focus on financial planning and let somebody else deal with operations, Alan Moore and Michael Kitces say.
  • Another factor is that some states have gotten overly aggressive in how they regulate financial advisors.
  • XYPN intends to make a decision this year and, if it goes forward, start offering a corporate RIA option in early 2024.

XY Planning Network is carefully weighing whether to launch its own corporate registered investment advisor in 2024, Michael Kitces and Alan Moore, the firm’s founders, told ThinkAdvisor on Tuesday during an online briefing from the ninth annual XYPN Live conference in Atlanta.

During the conference’s opening remarks earlier in the morning, XYPN also outlined its goals of continued reinvestment in its core offering, with expanded solutions planned for compliance, operations, bookkeeping and investment management.

XYPN also unveiled a new brand and look at the conference: a “further reflection of the ongoing growth and evolution of the network as it approaches 2,000 members in the coming year,” it said.

“We are going to spend the next quarter evaluating the possibility of launching a corporate RIA for our members,” Moore told ThinkAdvisor. “We are not committing that it’s definitely coming but it’s something that we do want to evaluate.”

XYPN announced the plan at its conference because “we wanted to be sure our members knew [about it], so that we could talk to the ones who are interested in that service,” Moore said.

“Historically, our offering has been the independent channel, where you’re your own RIA [and] your own chief compliance officer,” he explained.

“You can do everything yourself and that is not changing,” Moore said. “We’re going to continue to offer that path.”

But there are some advisors who would rather that somebody else be the CCO and run the business part of the advisory firm so they can focus on being a financial planner, he noted.

Another factor that has led XYPN to consider the addition of a corporate RIA is that “some of the states have gotten very aggressive in how they regulate financial advisors to the point that they’re stopping advisors from offering services or being paid for services,” Moore said.

“So giving advisors an option to be able to attach to an SEC-registered firm is something that we’re evaluating,” he said. It will be a “pretty big initiative if we choose to take it on.”

Kitces explained: “Most corporate RIA platforms are built around AUM models. They charge basis points for providing the service. And so our exploration is whether there is a corporate RIA model specifically for firms that want to do financial planning and charge for financial planning services, who may not have significant or any assets under management because that’s not their focus.”

When prospective XYPN members “reach out and they’re learning about XY Planning Network, many of them think that’s actually what we already offer is a corporate RIA,” Moore said.

“If we do move forward with the corporate RIA, we want to be sure there’s very clear paths between the two,” he added. “If they’re a part of the corporate RIA and want to become independent, they can do that. If they’re independent and want to join the corporate RIA, they can.

“What makes XYPN unique in the marketplace compared to a broker-dealer is that we say you can leave at any time with 100% of your business, and that’s your clients, your revenue and your data. And we want to continue to honor that if we do have a corporate RIA structure,” according to Moore.

XYPN’s “goal is to make a decision by the end of this calendar year,” he explained. “We’ll spend Q4 evaluating and make a decision if we choose to move forward” with the corporate RIA and then “likely, in early 2024 we would begin to offer [that] service to members.”

They are “not so much worried about a demand problem as we are an execution for the demand,” Moore added, noting that, “if we roll something like this out … we need to slow roll it … I want to be very careful to not grow too fast.”

XYPN Live

This year’s XYPN Live is its “largest yet, with over 840 attendees,” representing 20% growth over 2022, the firm said, adding “members themselves shared substantial growth in their own practices.”

Among the key growth figures shared during the conference’s opening remarks, mostly from XYPN’s 2022 Benchmarking Study, XYPN members saw a five-year client household growth rate of 28.6%, compared with the 5.1% client growth rate in Schwab’s 2023 RIA Benchmarking Study, while average annual revenue for XYPN advisors who start from scratch surpasses $300,000 by year six.

Pictured: XYPN’s Michael Kitces and Alan Moore.

Jeff Berman

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