The financial services industry is changing rapidly as investor needs and the regulatory landscape continue to evolve — with advisers reevaluating how they run their businesses and service their clients. This includes a continued trend of wirehouse advisers exploring a move to independence as a path to serving their clients in a way that meets the current moment. Below, I debunk common myths that prevent some advisers from making the move.
1. “I can’t afford to leave the wirehouse.” Compensation and the cost of running your own business can be tricky to calculate when contemplating a transition from the wirehouse to the independent channel. The inherent opacity in calculating trailing revenue, bonuses and commissions, not to mention the granular costs of operating under your own name (how much does printer toner cost, anyway?), can be a deterrent.
But it doesn’t have to be. It’s a worthwhile exercise to put pen to paper and figure out exactly what your total compensation package is and what it could be if you went independent. And though it’s tempting to focus only on tangible revenue, profit, and the ins and outs of a P&L, consider the intangibles: What would freedom to serve your clients as you please bring you? What would controlling your own schedule and owning a book of business that you can build a legacy with be worth? The total package, including your freedom and time, may very well work out in your favor.
2. “My clients and prospects want to work with a household brand.” Your current clients and prospects initially may have been attracted by the familiarity and cachet of a major wirehouse name, but that’s not why they kept working with you. If you didn’t provide them with excellent service, thoughtful planning and caring guidance, they would take their business and assets elsewhere.
This initial adviser fear — that their clients won’t follow them to a smaller firm or as they hang out their own shingle — is mostly unfounded. Your clients primarily work with you as their adviser, not with your wirehouse. When you dig a little deeper with your clients, you’ll learn they associate a big name with the security of their assets. Help them understand the role of your custodian and how their funds are kept safe.
Worried about prospecting and winning over new clients under your own name without the wirehouse marketing machine? Don’t be. Successful advisers get most of their clients through referrals, word of mouth and centers of influence. You can — and will — build your own brand and, best of all, it’s a brand you own and control.
3. “I won’t have access to the resources I need to service my clients.” It’s true that larger wirehouse firms are able to deliver robust tools and platforms, but as client needs become more sophisticated and financial planning takes on a holistic angle, advisers may feel boxed in by out-of-the-box wirehouse technology offerings. The open architecture available in the independent channel lets advisers tailor their technology suite to their clients’ unique needs and the way they choose to run their business.
More than that, independent adviser networks can offer advisers the same access to a variety of research reports, advanced planning guidance and investment products—all while being free from the pressure to sell a specific company line. Today, smaller firm partners are able to offer technology at the same scale as a wirehouse while remaining nimble enough to apply adviser feedback for constant improvement.
Leaving the wirehouse for the independent channel will be one of the biggest and most impactful decisions you make as an adviser — for yourself and your clients. Although it may not be the right answer for everyone, advisers who want freedom and more control over the business they’ve built are no longer hampered by some of the historical challenges that once came with taking the leap.
Andrew Daniels is managing principal for business development at Commonwealth Financial Network.
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