What is a hybrid RIA?
A hybrid RIA is a registered investment adviser whose advisors are also registered representatives of a broker-dealer that is not part of the same firm. The advisors deliver fee-based advice and asset management through the RIA, which they typically own, and sell commission products through the broker-dealer, which holds their securities licenses.
LPL Financial, which launched its hybrid RIA platform in 2008, describes the model as advisors joining its broker-dealer platform while keeping their own independent RIA. Cetera lists an advisor-owned hybrid RIA as one of four affiliation models in its RIA services business, alongside its corporate RIA options.
The key feature is ownership and control of the advisory business. The RIA files its own Form ADV, names its own chief compliance officer and answers to the SEC or the states for its advisory activity, while the broker-dealer is responsible under FINRA rules for the brokerage side.
How does a hybrid RIA differ from a dual registrant and a pure RIA?
The term dual registrant is used in two ways. At the firm level, Investor.gov describes a dual registrant as a firm registered both as an investment adviser and as a brokerage firm, so one legal entity runs both businesses. At the individual level, the phrase often refers to a person registered both as a broker-dealer representative and as an investment adviser representative. FINRA data cited by InvestmentNews showed 286,799 of 630,132 broker-registered individuals were also registered as investment adviser representatives.
The difference with a hybrid is who owns the RIA. An advisor at an independent broker-dealer can be an investment adviser representative of the broker-dealer's own corporate RIA, which makes the arrangement dual registration with a single firm family. In a hybrid, the RIA is a separate, often advisor-owned firm. InvestmentNews has noted that under a corporate RIA, the corporate RIA usually takes control of the accounts if the advisor dies or becomes disabled, which is one reason some advisors prefer to own their RIA.
A pure, or fee-only, RIA has no broker-dealer relationship for its advisors. It cannot accept securities commissions, and any product that pays only a commission is sold elsewhere or not at all.
How does broker-dealer supervision of a hybrid work, and what does it cost?
Under the rules in place as of October 2026, FINRA Rule 3280 and NASD Notices to Members 94-44 and 96-33 have generally required a broker-dealer to supervise, and record on its books, the transactions its registered representatives conduct through an outside RIA. FINRA described that framework in Regulatory Notice 18-08, the 2018 proposal that started the process of revisiting it.
Broker-dealers have commonly charged for that oversight. InvestmentNews reported in 2018 that broker-dealers usually take about 5% of their affiliated advisors' RIA revenue, and that some independent broker-dealers worried about losing that revenue if supervision were no longer required. Fees and terms vary by firm and are negotiated, so advisors should read their affiliation agreements closely.
That framework is changing. The SEC approved FINRA Rule 3290 (Outside Activities Requirements) on Sept. 15, 2026, according to the approval order published in the Federal Register on Sept. 18. The rule will replace Rules 3270 and 3280 and treat a registered person's work for an unaffiliated SEC- or state-registered adviser as an outside activity rather than an outside securities transaction. Compliance consultants reviewing the rule, including FiSolve, say broker-dealers will still receive prior notice and assess the activity but will not have to supervise it or record its transactions. FINRA said it would announce the effective date in a Regulatory Notice; Rules 3270 and 3280 remain in force until then.
Firms keep the right to set stricter conditions under Rule 3290, so how much oversight, and how much any oversight fee, survives the change will depend on each broker-dealer.
Why do advisors choose the hybrid model?
The main reason is to keep commission revenue while running an independent advisory business. Securities products such as variable annuities and commission-share mutual funds can only be sold, and their ongoing trails collected, through a broker-dealer. Advisor Perspectives notes that FINRA Rule 2040 bars broker-dealers from paying commissions to unregistered people, so an advisor who drops their securities licenses generally loses those trails.
Insurance is a partial exception. Kitces has noted that a fee-only RIA can still be paid on many insurance and annuity products through an insurance license and a brokerage general agency, without a broker-dealer. Even so, advisors with a large book of variable annuities or other commission business often find the hybrid model the simplest way to keep serving it.
Ownership is the second draw. Running advisory business through one's own RIA, rather than the broker-dealer's corporate RIA, gives the advisor control over the firm's brand, investment platform and, often, its custodian, and builds equity in a business the advisor owns. Some firms use the model as a step toward becoming fully fee-only; others treat it as a permanent structure.
The trade-off is cost and complexity. The advisor answers to two regulatory regimes, pays for compliance at the RIA, and may still pay the broker-dealer for oversight. InvestmentNews has argued that advisors with less than $100 million in assets are often better served by a corporate RIA or an existing hybrid group than by launching their own.
What must a hybrid RIA disclose on Form ADV and Form CRS?
Form ADV Part 2A, the firm brochure, carries most of the disclosure. SEC staff guidance says Item 5.E requires an adviser to disclose whether it or its supervised persons accept sales compensation, such as asset-based sales charges or service fees, explain the conflict that creates and how the firm addresses it, and say whether the compensation reduces advisory fees. Item 10 covers other financial industry activities and affiliations, and Part 2B, the brochure supplement for individual advisors, covers each person's other business activities.
Form CRS, the relationship summary, is required of both investment advisers and broker-dealers that serve retail investors under Advisers Act Rule 204-5 and Exchange Act Rule 17a-14. SEC instructions say a dual-registrant firm prepares one relationship summary covering both businesses, which may run up to four pages, while a standalone summary is limited to two pages. In a hybrid, the RIA and the broker-dealer are separate firms, so each one prepares and delivers its own relationship summary to the retail investors it serves.
Brokerage recommendations remain subject to Regulation Best Interest, while advisory advice carries the fiduciary duty under the Advisers Act. This is general information, not legal advice; firms should confirm disclosure obligations with compliance counsel.
What conflicts of interest come with a hybrid model?
The central conflict is that the same person can be paid in two ways and chooses which one applies. An advisor might recommend a commission product rather than an advisory account, or the reverse, depending on which pays more. Disclosure of which capacity the advisor is acting in, and how each is paid, is the main safeguard the rules rely on.
Regulators have focused on these issues. The SEC's Division of Examinations said in a June 2026 risk alert on economic conflicts of interest that it had observed advisers that did not fully disclose material conflicts created by compensation arrangements with affiliates, according to a Greenberg Traurig summary. Clients can check both sides of an advisor's record, since Investor.gov sends users to FINRA BrokerCheck for brokerage registrations.
Which independent broker-dealers support hybrid RIAs?
Several of the largest independent broker-dealers have publicly offered hybrid models. LPL Financial launched a hybrid RIA platform in 2008. Financial Planning reported in 2021 that LPL served about 450 hybrid RIAs with some 5,000 advisors.
Cetera offers an advisor-owned hybrid RIA option through its RIA services business. InvestmentNews reported that iTP Partners, with about $3.5 billion in assets, left Osaic to launch an RIA on Cetera's Blueprint platform.
Commonwealth Financial Network announced a hybrid affiliation model in 2013 in which advisors keep commission business on its broker-dealer and run advisory business through their own RIA. LPL completed its acquisition of Commonwealth on Aug. 1, 2025, according to an LPL filing with the SEC, and InvestmentNews reported that Bartholomew & Company, a long-time Commonwealth firm, launched a hybrid RIA while keeping its broker-dealer relationship.
Policies differ across broker-dealers, including which custodians a hybrid RIA may use, so terms should be confirmed directly with each firm.