Opening your own RIA can be an exhilarating experience.  No more administrative red tape, no more administrative paperwork – and the knowledge that you have escaped what is often times the bureaucratically oppressive climate of the major wire house.  Now it’s just you and maybe a few partners, some sales assistants and a secretary.  You can finally concentrate on your advisory practice.  But you maybe forgetting one thing – you are now an employer.  As a result, you are subject to a myriad of state and federal laws governing the employer/employee relationship between you and your staff. 


Gone is the large Human Resources Department that dealt with most of the mundane issues and requirements of being an employer.  As a result, you will need to add the “employer hat” to the set of responsibilities that you gained when you left the wire house.  You are now responsible for issues ranging from sexual harassment policies to proper overtime pay.  Keep in mind the often lengthy hour requirements of your practice (not to mention the occasional “difficult” client situations of advisory firms can create employment issues that, if not quickly and effectively dealt with can and will lead to major problems for your fledgling firm.  The good news is that you can prevent many problems by taking some simple steps:

Step 1 – Make sure you have an appropriate employee handbook crafted to the securities industry (the more specific to your practice – the better), that clearly lays down the ground rules of the employer/employee relationship;
Step 2 –   If your new RIA is a very small organization, keep this in mind when you establish to whom the employees will report HR problems – in other words, have a plan to follow when problems crop up (and they will);
Step 3 – Apply your employment policies consistently and fairly in the office; and
Step 4 – Use an outside, third-party legal opinion when you make decisions regarding employee changes such as new employee hires, employee promotions/demotions and employment termination.  Don’t scrimp here – it may be a very costly mistake later on.


Following these steps will go a long way to ensure that wearing your “employer hat” does not interfere with running the important part of your business.