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.
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."
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:
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'
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
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.
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
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
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
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
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.
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
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.
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'
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