Few industries change as quickly as the financial services sector. From constantly evolving regulations and compliance requirements to earth-shaking news about advisor movements, advisors find themselves confronting an industry in which the only constant is change.
For financial advisors considering a move away from the wirehouse, this can mean that there’s a lot of information out there to support transition planning. However, advisors leaving the wirehouse also face a lot of myths and misconceptions about making their move. Learn what advisors need to know about transitioning out of the wirehouse and into independence.
Myth #1: Independent Advisors Can’t Offer The Same Services As Wirehouse Advisors
While it was undoubtedly true that in the past, independent advisors struggled to keep up with the robust technological and product offerings of larger wirehouse firms, this is no longer the case. Supported independence models from firms like Ameriprise, Raymond James, and LPL Financial all offer independent advisors access to powerful technological platforms that allow advisors to perform every service they can at the wirehouse, but without the pressure to sell products that may not work for an advisor’s clients. In fact, independent advisors often have access to a variety of products and services that are not offered by traditional wirehouses, as the “lowest common denominator” management style of the wirehouse environment often restricts advisors from being able to manage client investments in the way that best suits the client’s needs. Steve Schwarzbach, co-founder and partner of Icon Wealth Partners, reports: “We essentially had no issues transferring our clients’ assets, including most alternative investments. Now we have an even broader, more robust set of investment solutions than at our previous firms.”
What’s more, independent advisory networks allow advisors access to the same level of research, market analysis, and advanced planning guidance that advisors at the largest wirehouses use.
Myth #2: My Clients Won’t Follow Me From The Wirehouse, Especially In An Uncertain Investment World
Many advisors believe that their clients prefer the more conservative, traditional world of the wirehouse and will be reluctant to follow an advisor who chooses a more independent, entrepreneurial business model.
However, experts say that this is simply not the case. Advisors can expect about 80% of their clients to transfer within 6 months of a move. What’s more, advisors can expect to grow their existing business and attract new clients because of the opportunities offered by independence that are foreclosed at the wirehouse. According to Scott Abry, a former complex manager with Smith Barney and former head of Steward Partners Holdings’ advisor consulting unit, “What will happen is, once you’re at a new place you get so energized that inevitably you end up getting more assets either from existing clients or from a referral.”
According to Michael Terrana, founder of Terrana Group, moving during uncertain economic times can offer advisors a significant competitive advantage when it comes to client retention: “Now, rather than when the markets are doing wonderfully and returns are easy, is the time when the client needs you more than ever! When the market is down, your clients need your good judgment, and they trust you — that’s why they give you their money to begin with.”
Ensuring that your clients feel that they have both a personal and professional relationship with you can help you to build the kinds of relationships that will make your clients feel confident that your move away from the wirehouse can act as an opportunity for them, rather than a risk. Keeping in regular contact with your clients, understanding their needs, risk tolerance, and hopes for their investments can help you to craft an explanation for your transition that accentuates the potential upside for your client base.
Myth #3: I Won’t Make Any Money In The First Year After I Transition
While transitioning from the wirehouse can be daunting, what independence opens up to the advisor, such as best in class technology, more marketing, better client service, less restrictive compliance, open communications, healthy business management solutions and one on one coaching to entrepreneurial advisors, means that transitions almost always grow client assets.
Advisors who are concerned about their ability to manage an entire business on their own have a lot of options for transition, including W2 models, boutique and super-regional firms that can provide a stopgap as advisors transition, or other forms of supported independence for advisors and brokers. Choosing the kind of supported independence that eases the transition process, providing client service architecture, supported transition services, and a robust platform for managing client assets can help to ensure advisor success from day one.
For advisors concerned about cash flow and ensuring clients feel supported throughout the transition period, expert advice such as that offered by the Terrana Group, in concert with a highly experienced transition team can ensure that advisors hit the ground running, even as they manage the sometimes complex process of transitioning their practice and building an independent brand.
Myth #4: I’ll Have To Give Up My Commission Business And Securities Licenses
While it is true that many independent advisors prefer a fee-only RIA model, this is by no means the only available practice for advisors leaving the wirehouse. Many advisors opt for a “hybrid” model, aligning their license with an independent broker-dealer to manage their commission business while maintaining a fee-only advisory practice. These hybrid models are growing in popularity, with more and more advisors choosing to diversify their businesses and opting to pursue independence while maintaining their brokerage business. At Terrana Group, we are experts in the independent broker-dealer space, and can help you create the kind of hybrid independence brand that serves your clients and provides overall growth to your business. .
Want to Keep the Conversation Going?
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 over 30 years, we have helped facilitate thousands of professional placements for Advisors, with client assets transferring exceeding $67 billion dollars. We have completed 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 as well as most Regionals, Boutiques, Banks, Independent Broker Dealers, and RIAs. 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.
