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Financial advisors face a major decision when it comes to their professional future: whether to remain affiliated with their wirehouse or break away and start their own registered investment advisor (RIA) firm.
Breaking away from a wirehouse can be a daunting prospect for financial advisors, but it doesn’t have to be. Unfortunately, many myths and misconceptions about leaving a wirehouse persist, which can make the decision to go independent even more challenging.
Myth: Going Independent Is Too Expensive
It’s true that setting up an independent practice requires some initial investment, but it doesn’t have to break the bank. Many independent advisor firms offer cost-effective solutions for transitioning advisors. The increase in payout alone often covers any additional expenses. Plus as an independent advisor, you’ll have more control over your expenses, and you can choose to invest in areas that will directly benefit your practice.
Myth: You’ll Lose Your Clients
Advisors often worry that they’ll lose their clients if they leave their wirehouse. However, many advisors find that their clients are willing to follow them to their new, independent practice. Additionally, as an independent advisor, you’ll have the freedom to expand your services and offer a more personalized experience to your clients, which can help you retain them over the long term.
Myth: You’ll Tarnish Your Reputation
Finally, many advisors worry that going independent will damage their professional reputation. However, this is rarely the case. In fact, many advisors find that going independent can enhance their reputation, as it demonstrates their commitment to providing unbiased advice and personalized service to their clients. Plus with the right support and resources, you can build a successful independent practice that is well-respected in the industry.
While leaving the wirehouse can be intimidating, it doesn’t have to be. By debunking these myths and misconceptions and choosing the right team to support your move, the benefits can far outweigh any challenges.
So why are so many financial advisors considering breaking away? There are several factors to consider.
Freedom & Flexibility
One of the most significant benefits of transitioning away from a wirehouse is the freedom and flexibility that come in terms of the services they can offer and the products they can recommend to clients. This can be particularly appealing for advisors who want to focus on providing holistic financial planning services, rather than simply selling products.
Advisors at wirehouses are often limited in terms of the products they can offer their clients, particularly when it comes to investments outside of the firm’s proprietary products. By starting an independent RIA, advisors have greater freedom to recommend the most appropriate solutions for their clients without being constrained by corporate oversight or other limitations.
Greater Control & Brand Management
As an independent RIA, advisors have greater control over their business and their brand. They can set their own fees, create their own investment strategies, and build their own client base. This can be especially attractive for advisors who want to differentiate themselves from their competitors and build a unique value proposition.
More Profits
Another advantage of breaking away from a wirehouse is the ability to keep more profits for yourself as an independent advisor. Because you’re no longer bound by proprietary products or sales quotas imposed by larger firms, you can sell and earn fees from a greater variety of products. Similarly, you don’t have to worry about meeting certain quotas — either in terms of sales or product recommendations — that may previously have been required while working at the larger firm.
More Transparency
RIAs are often seen as more transparent and client-focused than traditional brokerages. This is particularly important in the current regulatory environment, where there is increased scrutiny of the financial industry and a growing demand for fiduciary standards.
Clients Benefit, Too
Of course, the benefits aren’t just limited to the advisor. Clients also stand to benefit from this type of arrangement. With an independent RIA firm providing guidance and advice, there is greater potential for success — due largely in part to customized strategies that are developed based on individual needs, rather than predetermined mandates set forth by corporate entities that are focused solely on increasing profit margins — regardless of whether it’s actually in their client’s best interests.
Ready To Break Away?
With the right support and resources, going independent can be a rewarding and profitable career move for financial advisors.
AdvisorLaw offers support and guidance for advisors looking to join or start an RIA firm, including assistance with compliance, operations, and technology. We understand that every advisor’s situation is unique, and we offer a personalized approach to help each advisor achieve their specific goals.
One of the key ways in which AdvisorLaw assists advisors is by providing compliance support. Our team of specialists and attorneys helps advisors to navigate the complex regulatory landscape and to remain in compliance with all relevant laws and regulations. This can include assistance with drafting compliance policies and procedures, filing regulatory forms, conducting compliance reviews, and providing ongoing support to help advisors stay up to date with the latest regulatory developments.
AdvisorLaw can also provide support with operations and technology. We help advisors streamline their processes and implement new technologies to run their businesses more efficiently. This can include everything from selecting the right technology platform to managing data security and privacy.
In addition to these services, AdvisorLaw also provides support with practice migration. We help advisors navigate the logistics of transitioning their practice to a new firm, including negotiating contracts, managing client communications, and managing the administrative tasks associated with the move. We can help you structure your new firm in a way that maximizes your profits, while also making sure that your clients receive the highest level of service and support.
AdvisorLaw’s comprehensive set of services is designed to help advisors break away from their wirehouses and succeed in their new ventures. With AdvisorLaw behind you, leaving a wirehouse can be an empowering and profitable move for your career.