If you work at a wirehouse but have come to think independence is the best option for you and your clients, the best advice I can give you is to prepare and plan.
I speak from experience. My team, which is responsible for the advisor onboarding experience at Commonwealth, has worked with numerous wirehouse advisors making the move to the independent channel.
Advisors generally seek independence for three reasons: to better serve their clients, to be their own boss and to grow their business the way they want to. The good news: with the right preparation and planning you can accomplish all three with less trouble than you might think. But there will be challenges — here’s how to plan to meet them.
Retaining clients
You’ve spent years building good, strong relationships with your clients. You don’t want to lose those relationships when you leave the wirehouse — especially since the main reason you’re leaving is to serve your clients better.
The good news: Most of your clients will remain loyal to you, not your wirehouse. While some may prefer to do business with a nationally recognized brand name, in my experience 90% or more of clients choose the relationship over the name.
The challenge: When you signed on with your wirehouse, the contract undoubtedly stated that clients belonged to the firm, not you. And that firm won’t willingly lose those clients. But by being prepared, you should have the opportunity to bring your clients with you, or at least allow them to follow you. Hiring a securities attorney should be your first step when planning to go independent. By working with someone with legal expertise who has been through this before, you’ll have experience on your side. Your attorney can review your current contract and offer guidance on what you can and can’t do when it comes to contacting your clients.
Turning the lights on
Right now, your overhead is taken care of. Office space, hardware, software and maybe an assistant are provided by your wirehouse. Of course, this comes with a significant reduction in payout compared with the independent channel. Once you’re out on your own, you can likely expect a higher payout, but with an increase in expenses.
The good news: You’re starting your own business! It doesn’t get much more exciting than that. All of the decisions are yours, from where you decide to open up shop to what you name your new firm to what technology you use. It’s your chance to get creative as you come up with a name that fits who you are and find a space you enjoy going to every day.
The challenge: There’s a lot to think about. Should you pay higher rent for an office downtown? What elements do you take into account when brainstorming a business name? If you decide to affiliate with an RIA or an independent broker-dealer, that firm may have resources to help with these questions. Some firms, including ours, will help new advisors find space, provide marketing support for branding a business and offer assistance with technology.
Growing the business
Having the ability to grow the way you want is probably a big factor in your decision to go independent. You can market your business in a way that works for you and expand your offerings of products and services without a limit on account size.
The good news: Without restrictions on who you can serve or what you can offer, there’s no limit to your growth potential. And by serving your clients in their best interests, they’re bound to be happier, which could mean referrals and new business.
The challenge: With growth comes change. As your business grows, you may find yourself more focused on running the business than taking care of clients. Will you be able to scale? Should you take on additional staff? Firms that offer practice management support that covers all aspects of running a business, from growth strategies to human resources, can help you start out in great shape.
A final thought: Do your homework
The right people can make a big difference in how well your move to independence comes together. Whether it’s hiring a securities attorney or finding a partner that can provide the service and support you need, due diligence is key.
Every advisor is different, and every scenario is unique. By doing your research ahead of time, you’ll know what’s best for your situation and you’ll be ready when the time comes to start the business you’ve always dreamed of.
