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September 20, 2011 at 12:08 PM
To help advisors considering independence, Schwab Advisor Services released a white paper on Tuesday outlining the various legal and regulatory issues they’ll face in the transition.
The paper, “Legal and Regulatory Considerations: Navigating the Transition to Independence as an RIA,” is part of the Schwab Market Knowledge Tools series that took place on a webcast Tuesday afternoon.
The paper and webcast, along with a website, are intended to help advisors who are considering switching to an independent model.
Tim Oden, senior managing director of business development for Charles Schwab, noted that one of the first steps for advisors who are still trying to decide is to understand their legal obligations.
“Advisors need to be cognizant of the legal and regulatory issues,” Odem, (left), told AdvisorOne on Tuesday. “We recommend they find a lawyer who specializes in moving to an independent model and use them as a sounding board.”
It’s also helpful for advisors to find someone who has already made the transition to act as a guide, Oden said.
“Advisors should also work with someone who has been through the transition before. Advisors’ lack of experience comes to bear in the middle of the process and can translate into less time with their clients.”
Once they make the decision to go independent, it’s important not to forget about their clients. As Oden points out, “Advisors have the luxury of having three months to one year evaluating the model. Their clients haven’t had that luxury. Even loyal clients need time to think about what the model is, what it means for them and what the risks are.
To ensure a smooth transition, Oden stresses the importance of being prepared. “Advisors need to plan like crazy and consider every possible contingency. For example, what will your current employer say when you announce your resignation? What’s your plan if it’s friendly? What if it’s adversarial?”
