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Rise of the independents

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I feel it is high time to give accolades to some of the “players” in the multi-trillion-dollar financial services industry players that I think have overcome incredible odds to achieve great success. I will highlight a group this month and several different groups in future articles as well.

The first group that I think deserves a standing ovation, a group that I have proudly been a part of since the beginning of my career, is the rapidly growing segment of our industry labeled as independent financial advisors. We, the “independent” financial advisors, proudly distinguish ourselves from a variety of competitors, from the career agent to the wire house broker to the bank channel advisor. And we have certainly made an incredible impact in the industry.

Let’s step back and engage in a tiny history lesson. The most dominant financial players in our industry until about 20 years ago were the stockbrokers affiliated with the large Wall Street brokerage houses. They dominated the securities and asset management side of the business for the bulk of the last century.

On the insurance side, the career or captive agent sold the lion’s share of life insurance annuities, and other insurance products. These agents were well trained by the home office and came equipped with a slew of proprietary products they were proud to represent.

Something happened in our industry over the past 20 years, nothing short of a “David vs. Goliath” story. Financial advisors and insurance agents began migrating, albeit slowly at first, to the ranks of a new breed of financial professional that was essentially inventing itself on the spot. This new breed would suddenly be freed from the clutches of proprietary products, sales quotas and strict orders from the top. That was the good news.

The bad news (and frankly the massive uphill battle that began) was that the newly independent advisor was now left on his own to do the following:

1. Build an office infrastructure that could support the daily requirements required from a financial/insurance office … this of course includes the hiring of staff, computer purchases, renting office space, etc.

2. Establish distribution channels so as to access products and services for their clients

3. Keep up with all of the new laws, strategies and products

4. Market their services to their local community

5. Compete with the established professionals who still rode the credibility of being affiliated with the large, well known companies.

The list above is certainly not exhaustive but it hopefully tells a powerful story. The Independent had to build his or her own business from scratch, with no help from anybody. The risks were great but the rewards even greater; he would truly OWN his own business, built from blood sweat and tears. He would also be able to partake in the vast majority of revenue he created (instead of giving most back to the “house”) … if he could survive…

As we all know this story has a happy ending. “Independent David” has been competing with the “Goliath-like” national, brand name firms and doing an incredible job. There are thousands of stories of clients shopping advisors, talking with an independent (no name) firm and with a Wall Street broker or captive agent, only to have them pick the Independent because he had better ideas and was more passionate and was more creative and presented a more compelling case and on and on.

Today the ranks of the Independents are swelling as more financial professionals are motivated to build something special on their own. I can tell you firsthand that there is nothing more gratifying than building your own business in this competitive industry and truly succeeding by affecting the lives of thousands.

To my fellow Independents: I salute you and say that I am sincerely proud of all of you … it’s not easy being a small, unknown firm in the midst of multi-billion dollar powerhouse companies, yet we have had the strength to not only survive but also impact the trillion-dollar industry and shake it from its roots.

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