Outside voices and views for advisers

Taking the plunge and becoming an RIA

Fear is what keeps most advisers from fulfilling their greatest potential

Oct 4, 2017 @ 12:21 pm

By Sean Hanlon

We have nothing to fear but fear itself.

Franklin Roosevelt said that to a troubled nation in the depths of recession many years ago. Although my experience is by no means comparable, when I first decided to "go independent" I felt like the weight of the world was on my shoulders. A lot of fear is involved in striking out on your own. The fear, more than the actual process, is what keeps most advisers from fulfilling their greatest potential as an RIA.

Although the advisory landscape has changed dramatically since I hung out my shingle 20+ years ago, the underlying fears are the same. In considering making the move from a wirehouse, you naturally wonder: Can I maintain my income level? Will my clients follow me? Can I manage compliance, a custodian, the volumes of paperwork involved in running a practice? Will my time be consumed by administration and technology, instead of managing accounts and developing beneficial relationships?

These are all valid concerns and should be considered seriously before making a move.

Independence means you keep 100% of your payout and your growth potential is unlimited. It's a foundation to build a practice on your own terms. Some change-averse clients won't come with you. But most will, if you prepare in advance. According to Cerulli Associates, advisers who moved to the RIA channel typically see 91% of their targeted assets transfer with them. More than 75% of advisers who become RIAs said they were better off financially, according to a recent Envestnet industry study. Many advisers see dramatic increases in AUM once they're unconstrained by the artificial barriers imposed by a wirehouse.

Advisers are going independent with greater frequency. Cerulli found that the independent registered investment advisor channel grew assets in 2015 faster than any other adviser channel, growing 6.2 % compared with an average of 0.9% for all channels. In contrast, the wirehouse asset base in the same period shrank by 1.9%, ranking as the poorest-performing adviser channel in terms of asset growth.

These days it's easier and a lot quicker to build an independent practice on your own terms. More and more advisers are setting up shop in a home office or in one of the many start-up office spaces available in most cities and towns. Overhead, once a burden, is no longer an issue. One undeniable, huge benefit to independence: open-architecture technology.

Technology can either be a source of fear – Oh no, not another application I need to learn! Or it can be embraced for the flexibility and freedom it can afford you. Advisers need to perform dozens of tasks to run a practice. Regulations are constantly shifting. Compliance is increasingly demanding and time-consuming. Technology can bring all functions together, integrate and automate processes, and do the work for you. Think of technology as an associate or coworker, taking care of administration, while you tend to current clients and market for new ones.

Too often, I've seen advisers dispirited and even defeated by the administrative requirements of running a successful practice. They get sold on a technology "solution" that addresses one issue, and leaves them to deal with other pieces of the administrative puzzle. You can't run your practice when you're in a constant state of frustration and uncertain about how many pieces are in the puzzle, let alone what the puzzle picture will look like in the end.

The best way to complete the tech puzzle is to get a handle on the full picture – beginning to end. Advisers may be required to perform up to 300 tasks in the course of operations. How does one task intersect with the other? How can you quickly and efficiently get what you really want – to spend more time attending to clients, nurturing new leads and growing your practice?

Technology is not all about back-end operations. Clients appreciate seeing their account whenever they want, on any device they choose. The greater the opportunity to engage your client, the stronger the bond. A clean, mobile-enabled client-adviser interface is expected by millennials, and increasingly appreciated by every demographic sector. The rise of robo-platforms has put pressure on advisers to keep pace with the technology, and to offer strategy and customization only available through the human connection.

This is a great time to be independent. Never before have advisers had so many choices, and the resources they need to grow to their fullest potential.

Sean Hanlon is CEO of Hanlon Investment Management and Hanlon Advisory Software.


What do you think?

View comments

Recommended for you

RIA Data Center

Use InvestmentNews' RIA Data Center to filter and find key information on over 1,400 fee-only registered investment advisory firms.

Rank RIAs by

Upcoming Event

May 30


Adviser Compensation & Staffing Workshop

The InvestmentNews Research team will present exclusive data and highlights from its bellwether benchmarking study that will identify best practices for setting and structuring compensation and benefits packages throughout your... Learn more

Featured video


Why a sabbatical is the perk advisory firms can’t overlook

Financial advice firms offering this benefit praise the impact its had on their businesses.

Latest news & opinion

Finra anticipates oversight role for SEC advice rule

CEO Robert Cook says one area for examination could be the proposed requirement that brokers act in the best interests of their clients.

IBDs with the most CFPs

Here are the 10 independent broker-dealers that employ the most certified financial planner professionals.

Why we must create a more diverse and sustainable financial planning profession

CEO explains how, why a firm should commit to conscious inclusion.

Pope Francis wants financial advisers to work like fiduciaries

Vatican bulletin admonishes advisers who act against the best interests of their clients.

Wells Fargo sees slowdown in advisers exiting this year

The 2016 banking scandal and public relations fiasco had alienated some of the firm's advisers.


Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.


Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print