Adviser independence no longer synonymous with ownership

There are more business models in the independent space to choose from than ever before

Sep 23, 2015 @ 9:44 am

According to the 2015 InvestmentNews Compensation & Staffing Study, independence is no longer synonymous with ownership as employee advisers now outnumber owners at independent advisory firms.

Our experience at The Advisor Center mirrors these findings—especially when it comes to advisers exploring the RIA space.

In today's marketplace, many financial advisers are affiliated with a broker-dealer and operate under their broker-dealer's corporate RIA. Whether choosing to work as an employee or an independent adviser of the broker-dealer, both sets of advisers carry a series 6 and/or 7 license, are regulated under FINRA and may conduct fee-based (advisory) business as an IAR (66 or 65 license) using their broker-dealer's corporate RIA.

Advisers looking for turnkey solutions for running a commission-based and fee-based practice with the overall support and guidance of the broker-dealer are attracted to the employee full-service model.

Advisers can offer clients a variety of investment products, managed accounts or packaged products on either a commission or fee basis.

The broker-dealer provides complete and comprehensive support with compliance, technology, advisory guidance, research, reporting, client account billing and back office assistance.

Since the clearing firm and custodian are fully integrated (in almost all cases), technology is cohesive for the ease of trading, client reporting and operational support.

Wirehouse Advisers Lean Toward Corporate RIA

The majority of wirehouse advisers who are looking to break away still rely heavily on their commission business. The move to the independent arena is a large move in and of itself. Dropping one segment of the business at the same time is often too much of a change. Many advisers also have an emotional connection to their clients and the revenue they have generated. Moving to a broker-dealer RIA corporate model is often less disruptive.

The bottom line: Advisers have more business models in the independent space than ever to choose from. Broker-dealers are expanding their architectures to meet the needs of advisers seeking greater independence.


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