As an executive recruiter in the wealth management arena, I'm on the phone day in and day out with advisors. They seem to express the same concerns over and over again--the conversations are very similar. Some advisors say they've thought about what it would be like to "go independent" because trends show that the financial landscape is changing and those that don't consider it may wake-up in the next 10 years and realize they've been left behind. However, many advisors believe it's too costly, too much of a hassle for them and their clients, and quite honestly, they just don't have the time to consider it.

On the other side, I also deal with RIAs and firms that have already helped advisors "go independent", so it is an attainable goal.

Invesco Ltd., an independent global investment management firm, confirms the movement to independence. According to a research report they published titled, The Invesco RIA Research Series: Managing Risk in Today's Volatile Market, "This movement is being driven by the need for independence, a desire to provide holistic financial planning, and a yearning to grow a practice without interference from home offices. However, while this new sense of freedom may result in success, leaving the comfort of a large institution also means giving up marketing and business development resources. This lack of internal firm support, coupled with the recent economic peaks and valleys, has resulted in more RIAs seeking additional outside support and guidance on investment trends, risk management, practice management, and other benchmarks that they can use to more effectively grow and manage their business."

Because advisors have repeatedly expressed some of their concerns and questions, I decided to give them some answers. If you've been thinking about "independence" you may have some reservations about the transition itself. Here are some topics that may concern you and some answers that may help you:
 
1. DO YOU HAVE AN ENTREPRENUERIAL BONE IN YOUR BODY?   This is where it all starts; it's never been simpler than it is today to hang a shingle and claim ownership of your clients' assets.

 The gap between banks, brokerage houses, RIA's and B-D's is continuing to narrow and the industry is evolving and changing toward the "independent" direction. We need to tear down the paradigm that running a business is not worth the hassle and is too time consuming.

This paradigm is being challenged everyday by providing advisors with the correct support, product delivery, and increased flexibility of products...not to mention reducing the proprietary sales pressure placed on an advisor (by his "employer"). Clients will warm up to the idea of an open platform, and even thank you over time. 

Every conversation and/or situation is unique. The process and procedures being offered by most of the "aggregating" RIA's (at least the good ones) today are completely tailored and geared towards allowing financial advisors to focus on their clients--this has always been the primary benefit of working within the brokerage houses.  The gap is narrowing!

The objective of the fastest growing RIA's is NOT to allow an advisor to be dragged down by the day-to-day minutiae of running a business--and they are getting better at it...because at the end of the day, advisors have to spend time with and do right by their clients. 

 2) WHAT IS MOST IMPORTANT TO YOU, CASH or EQUITY?    Or as Felipe Luna likes to say, CEO, Concert Advisor Services, "Monetizing or Equitizing, what does this mean to you?"  

The great debate!  You have worked hard to build your AUM; but ultimately this is a "look yourself in the mirror" decision with no absolutes. No matter what your answer, once executed, it means three plus months of extra work and stress.  The old saying, "a bird in the hand"...comes to mind and has merit! 

If the answer is cash, then chances are reducing risk is worth a reduced payout and conversations will lead to exploring in-house type opportunities with one of the larger brokerage houses and/or firms.  We're hearing of one to three times trailing twelve.  It's a lot of money!  What's the catch?  Whoever wrote the check owns the right to decide what's best for your clients--any major decisions can be held over your head. 

If you choose equity and you're still looking to earn your place in history, then you owe it to yourself to give the independent route a serious look.  Realistically, you've decided the only thing holding you back is the "comfortable environment" that has been created around you.  This has come up countless times in discussion with advisors--what really holds them back is an unwillingness to break out of their comfort zones. 

I really enjoy this conversation!  Every situation is different; lots of moving pieces, but in the end are you ready for complete P&L accountability to your clients?

3) WHO ACTUALLY OWNS THE ASSETS NOW?  An obvious question you need to be able to answer truthfully to yourself. It's simple, when or if you accept money for a service, whoever paid you is who you work for.

4) REALISTIC PROJECTED ASSETS TO TRANSITION?  This is a question that really needs to be addressed much more in-depth; can you afford to go independent?  I will add...you might be surprised at the answer.
 
5) RETIREMENT PLANNING/SUCCESSION PLANNING WITHIN YOUR TEAM? Having a retirement and succession plan are important to have in place when going independent.

The RIAs and other groups I'm working with make it a point to customize solutions based on your individual business requirements. So, if you're starting your own business, the conversation needs to revolve around your needs; if it doesn't...keep looking!

When we talk about your needs, we have to consider both long-term and short-term. Important factors to discuss include the following: Do you have different age groups within the team?  Is it possible that someone on your team could retire within the next five years, and if so, are we looking for a buyout? There's a variety of different options when you're talking about a retirement strategy. You need to figure out how best to run "your" business while keeping in mind the retiring teammates wants and needs. Everyone's situation is different; so what better time to discuss than when designing your business plan?  

You need to come up with a process that makes sense and one that everybody's comfortable with...it's never too early to plan.  Communicate...communicate... communicate!  If you can identify the potential and manage the "surprises", you can reduce anxiety and tension.

 6) BUSINESS CONTINUITY CRISIS CONTROL; HOW EASY IS IT TO "GET OUT" BUT MAINTAIN CONTROL OF ASSETS AND ABILITY TO MANAGE CLIENTS' EXPECTATIONS?

I can remember a piece of advice given to a candidate from an executive within one of the top U.S. custodians while he was in the process of establishing a RIA. "Easy in, easy out."   Even with the best of intentions, good people find themselves in bad situations. What's your contingency plan/exit strategy?  More important, how do you mitigate the risk to your clients and maintain their trust when things go wrong?

Maybe you've been tempted with the idea of gaining independence, but just don't know where to start.

There are resources available to support you in the wealth management field. Industry leaders offer assistance and turnkey solutions for financial advisors that want to make the transition to independence and take control of their clients' Assets.

If you have questions--I'm here to listen and give you some answers. Begin your research today; call me (239-596-7280 ext. 14) to discuss your current situation along with your vision of the future and we'll take the time to get you some individualized answers on going independent.