All happy brokers say similar things, but every unhappy broker is unhappy for a different reason.
For some, it is the inordinate amount of time spent protecting their clients from things like “nuisance fees” (for example, account maintenance and check-writing fees), rate hikes and poor product selection. Most just want to give their clients the best service the industry has to offer, whether that involves providing transparent pricing and customized reporting or employing the latest technology in researching and making investment decisions. Some advisers are fed up with murky compensation programs, and rigid “one size fits all” compliance and operations solutions. In any case, there are lots of reasons to want to leave the wirehouses.
No adviser escapes from this environment to become an entrepreneur simply by focusing on fleeing the negative. To be an entrepreneur, an adviser must be aiming for something better – the pursuit of new and better opportunities to look after clients, and for clients better to achieve their goals.
So for a successful adviser wanting to escape, what are the options? There are a number out there. Here are just four possible “pathways to independence” that grant advisers varying degrees of control over the things that bother them about their current situation. These pathways are:
• Work as a W-2 broker with a wirehouse.
• Work as a 1099 registered rep with an independent broker-dealer.
• Join an existing registered investment adviser.
• Create your own RIA.
For those of you who may already have had the temerity to ask for your own space, or your own offices, or who have, perhaps, even carved out your own brand in-house, some of these options may not offer enough. Some may not satisfy that entrepreneurial spirit you have, that craving for true independence – the need you feel to ensure your clients really do get the best deal and achieve their goals.
The only option, then, could be for you to set up your own firm – with your own team and with your own brand.
But is entrepreneurship right for you? What does it take to be an entrepreneur and build a great business? As a guide, why not start by looking at the excellent book "Heart, Smarts, Guts and Luck: What It Takes to be an Entrepreneur and Build a Great Business," published last year by Harvard Business Review Press.
And at the same time, in that book's vein, ask yourself the following questions:
• Am I interested in – indeed, excited by – the concept of accountability, of “owning my own risk”?
• Are my clients' interests of paramount importance?
If your answer to these two is anything other then a resounding yes, entrepreneurship is not for you.
Then ask yourself about some of your beliefs:
• Do I have total belief in both myself and my ideas?
• Do I have total belief in my team and everybody with whom I work?
• Do I have total belief in my relationship with my clients and my importance in their lives?
In the world of independents, truly successful advisers believe implicitly not only in who they are and what they do, but they also always have the courage of their convictions. Whatever their strengths and weaknesses may be, they also believe in everybody with whom they work. And finally, having spent all those long, hard years nurturing them, helping them to grow and developing a relationship of
trust with them, they must, of course, have total belief in their clients.
Of course, there will be many more you'll need to ask yourself, but let's finish with just two further questions. Successful entrepreneurs are always open-minded. Are you? And they are always be prepared to learn. Are you? For example, from a purely practical point of view, when setting up a business from scratch, no one knows everything from Day One. Often, the sheer multitude of choices you'll be faced with will be overwhelming: You'll just have to accept that fact. But as you and your business continue to develop, only by keeping an open mind will you learn to make right decisions, and choose what's best for your clients, your team and you.
All positive responses so far? Still think you might have what it takes to be a successful entrepreneur? If you do, then your timing couldn't be better. The industry is now at such a point that those with the entrepreneurial spirit and vision have greater access than ever before to the partners, the technology and the support to make breaking away from the wirehouses even easier. To serve your clients as a truly great adviser, you, your team and they all need the best and least restrictive environment possible: Independence can provide you with that.
Rich Gill is a managing director at Focus Financial Partners LLC's Connections program, where he is responsible for business development. He is an expert in counseling broker teams and individuals transitioning from wirehouses.
