After two years of uncertainty and upheaval, it’s no wonder that many financial advisors, like those in all walks of life, are considering more independent career paths. But making the decision to leave a wirehouse for a more independent financial advisory practice is a complicated one. Understand more about the pros and cons of going independent.
Pro: Client Choices And Investment Decisions Are In Your Hands
When you work for a wirehouse, there can be a tremendous amount of pressure to push proprietary products or a service model that doesn’t work for every client. When it comes to choosing your clients, restrictive minimums may limit your ability to take on clients, even those with substantial growth potential over time. As an independent advisor, however, your investment strategies can be customized to suit what’s best for your clients, not what’s best for the firm. You can also choose to take on clients that wirehouses don’t usually pay attention to, like high earners who aren’t rich yet (also known as HENRYs). This can lead to higher client satisfaction and better returns for advisors who are willing to put in the work to design customized investment strategies for each client.
The ability to customize your business model and client base to suit your own strengths and values can be a major driver for career satisfaction. Without minimum targets or a defined set of clients, you’re free to take on work that you find personally rewarding, and to create a business that you can be proud of.
Con: You May Not Have An Established Client Base
Although most advisors who choose an independent model are able to convince many of their clients to follow them to their new venture, losing clients is a major risk of starting an independent business. For some clients, who take advantage of wirehouse cross-selling opportunities such as discounts on mortgages or other financial products, it may be a bit more challenging to convince those clients to leave a wirehouse model. In addition, it can be more difficult to market your business when you’re competing with established national brands. Establishing a marketing strategy is a critical part of business planning for independent advisors, who may need some lead time to really get a full roster of new clients.
Pro: You Can Decide Where And How You Work
The past few years of pandemic-related uncertainty have shown a lot of advisors that more flexible work-from-home arrangements may be a better fit for their personality and working style. As an independent advisor, you have the freedom to decide what kind of office arrangement and workflow works best for you. Fully remote work, co-working, an office space of your own design, or some combination thereof: any of these arrangements are possible for RIAs.
In addition, flexible hours can allow you to work at the times and in the ways that work best for your priorities, allowing you to prioritize family needs, hobbies, or educational goals while still serving your clients.
Con: You’ll Lose The Infrastructure And Support Of A Wirehouse Environment
While wirehouse work can undoubtedly be limiting, it also comes with a number of built-in support systems that can make an advisor’s work easier. Dedicated marketing, information technology, research, compliance, and human resources infrastructure can be helpful, particularly to advisors managing a large number of clients. As an independent advisor, you’ll be responsible for ensuring that all of these functions are carried out. For some facets, like compliance and technology, setting these in place and proper tech stack choices are crucial. Others, such as research and marketing, done correctly, will positively affect your ability to do your job well and grow your enterprise. As an independent advisor, you’ll be responsible for putting workflows into place to manage each of these aspects of your new practice. While you can tailor your solutions to your needs, getting started and maintaining your focus as new responsibilities pull you in new directions can be a challenge. Creating a thorough business plan can help you to get solutions and structure in place to support your goals.
Pro: You’re In Control
Perhaps the most significant upside to striking out as an independent advisor is that your fate rests in your own hands. Do you see inefficiencies and room for improvement in the wirehouse model? You’ll be able to put your own solutions in place to maximize your own growth. Would you rather be dealing with clients whose ethics and values match your own? You can choose your clients and tailor solutions that reflect their values as much as their goals. Your potential income, growth, and work-life balance are all entirely up to you.
Want to Keep the Conversation Going?
Thinking about making the leap to independence, but not sure if it’s right for you? All of us at Terrana Group welcome the opportunity to consult with you to determine the right platform for you going forward — one that satisfies your long term objectives and is also best for your clients!
Over the course of nearly 30 years, we have helped facilitate thousands of professional placements for Advisors, with client assets transferring exceeding $67 billion dollars. We have completed thousands of placements in most every major city throughout the United States, while building deep relationships with the advisory world’s most sophisticated and notable firms — including Wall Street Brokerages, most Regionals, Boutiques, Banks, Independent Broker Dealers, RIAs and Custodians. We have a broad knowledge of the deals that are currently being offered and will ensure that you are being presented with the offer which will be best for you.
Confidentiality, professionalism, and respect are protocol to our practices and beliefs; we handle each and every step of the placement process with complete communication, keeping you informed while making the process smoother from beginning to end.
We are proud to always be considered as a great asset by our clients because of our proven expertise, many years of knowledge, and acute attention to detail. Financial Advisor Recruiting Services are not all created equal; we guarantee that the TG experience for clients and candidates is always world class.
We are based in Chicago, with a nationwide reach. Let us know you are interested by contacting us today. To get the conversation started, email info@terranagroup.com or give us a call at 312.655.8380 today.
