The decision to break away from the traditional wirehouse model is a bold step toward freedom, innovation, and autonomy, as well as increased professional satisfaction.
However, the road to Advisor independence is paved with complexities that demand meticulous planning and execution. While this move offers more flexibility, control, and potential income, it also requires more responsibility for compliance and administrative duties.
Let’s explore a comprehensive checklist of essential steps Advisors should take to prepare for an exciting and challenging new venture.
1) Take a Moment to Reflect
Defining your vision for your practice is crucial to assessing whether independence aligns with your long-term career goals.
Understanding your motivations, having a clear vision for the future, and working with a skilled financial services recruiting team can clarify your decisions throughout the transition process.
There are a plethora of options for wealth management professionals today, including starting your own practice, joining an existing RIA or hybrid RIA, or affiliating with an independent Broker-Dealer.
Consider the differences between these models in terms of services provided, compliance requirements, admin tasks, and potential compensation. The experts at TERRANA GROUP can help you find the option that best fits your work/ life balance and cultural preferences.
2) Think Proactively
If you haven’t yet, now is the time to start developing your strategic business plan. This dynamic document serves as a foundation for building the life you’ve always wanted. Thorough planning gives you a competitive edge in any endeavor.
Your business plan should encompass the services you want to provide, your target market, how you will handle licensing and legalities, what you need for your tech stack, and where you see yourself in five years. It provides an invaluable road map and protection against any challenges that may arise.
Evaluate your current technology infrastructure and assess whether it meets the requirements of an independent practice. Consider the adoption of a cutting-edge client relationship management (CRM) platform, AI-powered marketing tools, and other technology solutions that align with your chosen path. According to PwC, nearly all of today’s asset managers rely on disruptive tech and big data to stay competitive. Seamless tech stack integration is crucial for a smooth transition.
Choose and establish the business entity for your new practice, such as forming an LLC or S-corp. This involves tasks like obtaining an Employer Identification Number and business licenses, establishing company accounts, and understanding tax implications. Consulting a lawyer and an industry-oriented accountant can be very helpful in getting your entity properly structured.
Our experienced consultants can assist Advisors with creating a comprehensive client transition strategy to mitigate potential disruptions. Clearly communicating your decision and emphasizing the benefits of your move to independence signals a commitment to transparency, continuity of service, and a sustainable upward trajectory.
3) Build Your Support Network
There are more options than ever for those in the wealth management space, and the industry continues to demonstrate resilience in the face of macroeconomic uncertainty. Per McKinsey & Company, “history offers one clear lesson: those that make bold moves and invest in growth early emerge as winners.”
Skillfully helping your clients navigate this challenging environment helps build loyalty to your brand. As demographics shift, Advisors need to cultivate adaptability and embrace a more holistic approach to engaging their clients, who have evolved to expect enhanced value propositions and more complex services suited to various life transitions.
To achieve this omnichannel omnipotence, it’s crucial to establish a strong, organic network of support for your chosen business model.
At TERRANA GROUP, we have over thirty years of experience helping Advisors find their North Star. Experiencing trepidation when leaving the wirehouse is extremely common — but it’s vital to overcome the fear gap by forming strategic relationships that can provide essential support so you can focus on your strengths.
4) Risk Management
Identify potential risks associated with your transition and develop a robust contingency plan. Consider scenarios such as client retention challenges, market fluctuations, or unexpected regulatory changes. Having a well-thought-out risk management strategy will ensure resilience in the face of unforeseen challenges.
Embarking on the journey toward financial advisor independence is a transformative process that requires careful planning and execution. Transitioning to an independent path involves extensive preparation, research, relationship management, legal and compliance steps, new skill development, and upfront investment.
Advisors should thoroughly assess their goals, capabilities, and preferences before making the leap. With careful planning and execution, the move can result in greater success, freedom, and professional satisfaction.
The industry experts at TERRANA GROUP excel at navigating the complexities and challenges associated with breaking away from the wirehouse model. As you embark on this exciting journey, remember that breaking away from the traditional wirehouse modality can nourish unparalleled opportunities for exponential growth and client-centric success.
