Yogi Berra was renowned for making nonsensical comments to reporters that surprisingly made a lot of sense. For instance, “When you get to a fork in the road, take it.” My favorite wasn’t about business, but it could have been: “If you don’t know where you’re going, you’ll end up somewhere else.”

I find this quote especially apt for owners of independent advisory firms whose informal business plans often boil down to: “Get some clients, give them financial advice.” To help my new clients (and sometimes my old clients) get a better handle on where they are going and make better decisions about what to do next, I walk them through a breakdown of the basic business models that independent firms typically use. The model they choose will dictate the direction in which their business will go.

Here are the five basic business structures that independent advisory firms fall into:

Investment Management Firms This is a business model primarily used by some baby boomer generation owner-advisors. These businesses do not provide any financial planning services. Instead they generate revenues from asset management and, to a lesser degree these days, the sales of financial products (mutual funds, insurance, annuities, IRAs etc.), using advanced portfolio allocation strategies and ­products.

Due to their relatively low overhead, these businesses typically ­generate comparatively high revenues that ­translate into large profit margins and high owner income. However, with high ­competition for clients these days, including that of digital investment management platforms, these businesses tend to have lower market values than the more full-service firms in this sector.

Hybrid Firms These firms combine investment management with financial planning, but typically on an informal basis. While these businesses normally use advanced portfolio management strategies, they also provide financial planning as needed, without regularly scheduled client meetings or even the use of financial planning software. Consequently, if they charge for their financial planning services, it’s not very much and often is included in what’s already being charged to the client for asset management or given for free as a value add.

Because of the financial planning services offered by these firms, the clients tend to be more loyal and, therefore, less likely to be recruited by other advisors or lost to a ­digital platform. Consequently, while they typically will generate lower ­revenues than pure investment management firms, their higher client retention tends to make them more valuable as businesses when the time comes to sell.

Wealth Management Firms These are the most “full service” businesses in the independent advisory pantheon. Wealth management firms typically offer investment management (including both passive and active strategies), financial planning supported by planning software, multiple client meetings per year and a variety of service models to meet the needs of a broad range of clients. As you might expect, with their large service ­overheads, these firms tend to have lower profit margins than many smaller firms—but due to their deeper connection to typically more wealthy clients, their market values are generally the highest in the independent advisory world. In the past 10 years, these firms have been the fastest growing types of advisory firms in the industry.

Financial Planning Firms These firms typically focus on the financial planning process to provide the direction of each client relationship. They generally use cutting-edge financial planning software, create complete financial plans including short and long-term goals, and provide cashflow projections well beyond retirement—with client assets moving over to their management only after the client has seen and accepted the financial plan.

Their advisors meet with clients at least four times a year. And their investment strategies are typically passive, in low-cost ETFs or funds.

Usually they charge financial planning fees in addition to AUM fees. These businesses typically offer their owners a balance of cashflow vs. business value due to the strong relationships they develop with their clients. If the transition is handled prudently, a large majority of these firms’ clients will transition to a new owner with a similar philosophy on the financial planning first, rather than investment management strategy.

Financial Consulting Firms These are businesses that use the so-called, “Millennial Advisory Model,” as the model revolves around ­millennial generation clients’ desire for ­professional help — via the phone or Internet —with do-it-yourself portfolios and financial plans for a relatively low monthly fee. The value of these new businesses is still hard to assess, as there is yet a track record for ­transitions to new owners, values, client retention, etc.

But overhead is low: no formal office, no dress code, no travel, little or no client entertainment, no revenue sharing. The same goes for their workload per ­client — no asset management, no formal financial plans, trade execution or confirms, no quarterly statements, no portfolio management, etc. — that they can work with up to three times the number of clients that a traditional financial planner can handle. Consequently, for advisors who prefer high cashflow rather than long-term business value, this business model will become increasingly attractive.

Armed with an understanding of the options that most independent advisors have available to them, hopefully you’ll be able to make a better choice about what direction to go with your business.

As a final bit of advice, determining the business model that best meets your needs and goals is just the beginning. As you can see from the above analysis, an owner advisor’s goal about what kind of business she/he wants to build largely boils down to one question: Do you want to generate a lot of cashflow or a business with a higher value on the back end? Of course, there are other key issues, such as what services you really want to provide and what type of clients would like to provide them to. No doubt, you’ll find that those answers, too, will come more easily once you have a good idea where you want to go.

As you build your business in the model that you’ve chosen, you’ll be faced with many challenging decisions. For instance, as your business grows, you’ll be inclined to add more services to attract a broader range of clients.

To make decisions about services, it’s helpful to keep your original goal in mind. Will these new services or the clients they attract increase the value of the business, or increase ­profitability?

New services usually increase ­overhead: How will that affect your cashflow or value equation?

Watch out for the temptation to charge little or nothing for additional ­services. That can put a lot of pressure on ­increasing other areas of your business — which can affect your client ­relationships.

If your goal is to maximize the value of your business, you should look at adding services from that perspective, too. If those services aren’t profitable and/or if any new clients attracted by them aren’t profitable, they may decrease the value of your business to a potential buyer. While there’s nothing wrong with expanding your business, if you don’t do it right, it can take you farther away from your goals.

What’s the bottom line? The best way to build an advisory firm you will not end up resisting is to stay true — true to your goals, no matter what, so you don’t end up somewhere else.

Angie Herbers is an independent consultant to the advisory industry. She can be reached at angie@angieherbers.com.