Investor-to-investment steps at a small startup RIA
Can someone please help me map out the steps / various players involved in a typical private investor-to-investment transaction at a small startup RIA firm? Please comment on my understanding below, especially on step 3, 4 and 5:
- Investment Advisor (IA) brings in a client (BD, accounts transfer, custodian relationship etc.)
- IA prepares an IPS
- IA does asset allocation based on client’s risk tolerance and return requirement
- IA typically has particular investment beliefs, philosophies, styles, etc., for various asset classes and based on that he selects appropriate Asset Managers (AMs) to invest client’s assets
- AM diversifies funds allocated to her and buys/sells based on the recommendations from her in-house team of research analysts (RAs)
- IA monitors and reviews AM’s performance and hires/fires them as necessary
- IA does rebalancing as needed
Also, 1) does a typical small RIA outsource step 3 and 4 above to a PM and be just a relationship manager? 2) assuming the strategy is 80/20 Core/Satellite, does a typical small RIA outsource step 4 above just for the Satellite potion of the portfolio? 3) who typically ensures proper diversification; IA or AM?
Any help in crystallizing this will be much appreciated.