Transitions (II): The Pre-Independence Checklist for Wirehouse Advisors

“There’s no prescription for how to hire the dream employee, but a thorough evaluation can maximize your chances,” he notes.

Assess your patience.

Going independent does not typically provide a quick payoff. Although the advantages may be heavily touted, after you add up your costs, the margins may be tighter than you expected. 

While it’s certainly possible to create a very successful independent firm, Langdon tells advisors not be seduced by images of immediate ultra-high pay.

“It’s the long-term value that you can build in your own business and the net amount that flows through to you that matters,” he says.

“No matter how much money you may eventually make, keep in mind that it may not come right away,” Langdon explains. “Therefore, in order to pay rent and salaries and buy furniture and computers, you need savings to keep the firm going for 8 to 12 months until the income starts predictably rolling in.”

Prepare your family.

Even though your move may be fueled by a desire to reduce the time you spend at the office, in the short-term, you’ll find yourself working longer hours.

“So make sure you get buy-in from your family,” Langdon says. “They’ll be seeing less of you in the initial months, but you will still want to rely on your family’s support.”

Being honest about the demands of the early months can help smooth your transition at the office and on the homefront.

Acknowledge what you’ll lose.

It’s human nature to focus on the benefits of going independent, but Brackett says your success depends on realizing that you are also giving up something. “Many advisors have accepted retention money to stay at a particular broker/dealer or,” he says, “they may have joined a particular firm because of the name recognition and the publicity they receive. It’s important to understand that, as an independent advisor, you will need to build name recognition on your own and maybe you won’t be able to afford the advertising and PR you once took for granted.”

Because it’stough to build a strong brand presence and service your clients at the same time, Langdon suggests working with a professional marketing and branding firm.

“Having visible alliances with a respected custodian such as TD Ameritrade Institutional, Schwab Advisor Services, Fidelity Institutional or Pershing Advisor Solutions also helps. These larger, more established custodians will also have practice management consultants on staff who can help you with business development, staffing and operational decisions,” he notes.

Stay open to compromise.

It doesn’t have to be all or nothing.

Rather than go totally independent, another way to enjoy instant credibility and operational efficiencies would be to join an existing independent firm with a national footprint, such as Focus Financial, Financial Focus, Fusion Financial Network, Lindner Capital Advisors, Ensemble Financial Services, or FocusPoint Solutions.

Alternatively, many independent broker/dealers, such as LPL Financial, Securities America, Financial Network, Commonwealth, Raymond James and Cambridge, have a long tradition of helping regional directors and branch managers who hold FINRA Registered Principal licenses with their firms develop highly-professional and efficient models to make the transition from wirehouse to the independent business model less stressful.

Many of these regional-director-led operations, such as BAR Financial (part of the Financial Network/Cetera organization) or Integrated Financial Group (a large branch office associated with Securities America) work and feel like a mini-broker/dealer within a larger broker-dealer.

Interestingly, while mistrust of all financial institutions runs high in today’s post-Madoff era, this situation has nullified what has traditionally been one of advisors’ biggest fears of going independent — the loss of the big corporate brand name.

“Throwing off the brand name is actually a major advantage,” says Langdon.

“If you’ve been with a big brokerage, you’re carrying the sins of your parent with you,” he explains. “The public today is dubious about many formerly gilt-edged financial companies. Consumers see them as the bad guys, the ones who caused the recession. Once you go independent, you don’t have a tarnished image — and that’s a good marketing advantage.”

Brackett notes that working for yourself will give you more energy and make you better at forging the client relationships that are so important to the long-term health of your firm

“Yes, it’s important to figure out where to office and when to hire,” he says. “But buying the stuff is the easy part. The hard part is doing the groundwork for working through a life-changing decision. If you dedicate that time upfront, you will be better able to manage the stress of those initial months.”