Few have given more thought to the running of a financial planning practice than Mark Tibergien, CEO of Pershing Advisor Solutions. The long-time consultant and observer of the advisory profession has a unique vantage point to observe the profound growth in the independent channel.
While the move to establish an RIA firm continues to be an attractive path for advisors who want more control over their business and a greater share in the profits, Tibergiensuggests that advisors mulling this move need to get to the root of what’s motivatingthem.
“Ask yourself, ‘Am I leaving something—or am I joining something?’” he says. “If you are honest with yourself, you may find that you are simply alienated by your current broker/dealer, and not ready to commit what it takes to make a successful transition from employee to business owner.”
In fact, Tibergiensays it’s the evolution from employee to owner that is often most central to advisors’ success. “When advisors work within a wirehouse, they have everything done for them,” he explains.
“The transition to ‘Now I own it’ often comes as a big surprise,” says Tibergien. “Advisors tend to focus on getting the full payout when they go independent, but they have to parcel that income out on overhead, and adjust to managing the entire office on their own.”
How Will You Know?
If you’re hiding your firm’s brand name from clients, you have a good sign it’s time to leave the wirehouse or current broker/dealer. “Perhaps you have reached the point in your practice where you are not relying on that outside brand to help you,” he explains.
“Maybe you’re not leveraging your broker-dealer anymore because the platform is no longer relevant to your business. Or, perhaps the way the firm is structured, your broker/dealer cannot support you in the direction you want to grow. Also, in today’s scandal-plagued industry, you may find yourself affiliated with a firm whose tarnished name is no longer a draw for clients.”
If you’re interested in making a move from a wirehouse to open an independent Registered Representative and/or Registered Investment Advisor, Tibergiensays answering these three questions can help guide your decision and pave the way for a smooth transition to independence:
Do I have the entrepreneurial mindset?