If You're at a Wirehouse, Run the Independent Numbers

Most of us view life from our own unique perspective. We make decisions based on our experiences and education and sometimes our intuition enters the picture. Last week I had a conversation with an independent advisor who related an interesting story to me. Although I have pondered this issue a number of times before, something clicked inside me this time. Here’s the story.

It seems this advisor was being recruited by a manager of a regional brokerage firm. The manager told this advisor that he would no longer have to worry about paying his own expenses and that he would have the full support and resources of the brokerage firm behind him. To the manager, it seemed reasonable that this independent advisor might find the offer attractive. But to a person who has tasted independence and has found success there, accepting this manager’s offer would be akin to taking a step backwards.

What was really interesting was when the advisor told this manager that he was already receiving a 90% payout. The manager just stood there like a deer in the headlights. Was it possible that this manager was unaware of the higher payout of an independent? Then it hit me. I remember when I worked with a large brokerage firm many years ago. I knew what I was told. I drank the Kool-Aid, so to speak.