What You Need to Know
- The desire to go indie often is motivated by an advisor’s economic situation or the desire for autonomy.
- There are several models of independence with various features that may or may not be right for an advisor.
- The resources that an advisor needs will define the model of independence that makes sense for them.
A trend in the wealth management industry that cannot be ignored is the growing number of advisors who are leaving wirehouses, independent broker-dealers and larger RIA firms to embrace independence. The desire to ‘go indie’ often is motivated by an advisor’s economic situation or the desire for autonomy.
There are also some less obvious reasons why it can be a great idea for an advisor to own their practice, such as improving client relationships.
It’s important to note, however, that there are several models of independence, with various features that may or may not be right for an advisor.
Once an advisor is committed to going independent, they should identify which model of independence is right for their practice by examining their current practice and understanding the pros and cons of each model. This process will help them make clear decisions about the framework of their new firm and will maximize the empowerment they find through independence.
Examination of Current Practice
As advisors evaluate where their practice currently stands and compare it to the kind of advisory firm they hope to create, they should identify a solid vision for their firm. From there, they can pinpoint the help that they may need as they move towards independence.
The resources that an advisor needs will define the model of independence that makes sense for them. Advisors should choose the appropriate model based upon their own strengths and shortcomings.
In addition, several vital areas of a practice can help determine the model that makes the most sense:
- Succession Planning – Advisors should consider the longevity of their business and what plan they have in place to exit. Making the move to independence can help advisors fill potential gaps in that plan, as some RIA platforms will offer a succession planning solution as part of their longer-term solution.
- Compliance – Being at the very heart of any advisory firm, it’s important to recognize which path to independence is going to be best for maintaining a firm’s compliance needs. Compliance is an area that most advisors spend little if any time in before establishing and independent practice.
- Tech Stack – Technology has become an essential part of financial planning, therefore it’s important for advisors to choose a model that enables them to build out a tech stack that optimizes operations and experiences in their practice.
Finally, advisors should consider how a move will impact clients. As a fiduciary, advisors have a responsibility to make sure that any drastic changes to their practice will benefit their clients.