5 Steps to Boosting Your Independence — Today

Many advisors have lost that loving feeling of being independent. Broker-dealer service shortfalls and tiresome business processing are testing advisor patience.

Independent registered independent advisor models are paving the way by creating the ideal working climate and answering advisor wishes in the process. They provide varied focuses and expertise for significant practice upside. Vetting them, though, takes considerable time, and the numerous opportunities that are available make the process quite cumbersome. 

For advisors considering the leap to an RIA, taking some time to evaluate the options and to consider their own goals can help make the change less intimidating. 

1. Embrace breaking away from the sea of sameness.

For too long, BDs have been seen as the path of least resistance for advisors, whose plans to move on are influenced by the comfort and familiarity of what’s worked before. However, a new element is in play: the anxious excitement of advisors wanting a better and more meaningful way to work.

Opportunities for positive change are synonymous with indie RIAs, but some recruiters may remain loyal to their favorite BDs. The bigger BDs are capable (and more likely) to provide advisors with head-turning forgivable notes, high recruiting payouts and volume bonuses.

This makes them hard to abandon. Plus, if advisors are supposed to differentiate by specializing their practices, is it best to do that under the uniformity offered by dated norms at some BDs?

2. Get expert input.

Like top financial practices, independent RIAs have specialties and expertise. They compete mostly on price (already the industry’s lowest) and service.

They provide essential functions like BDs do, including compliance, supervision, account processing, technology, etc., so you can plug and play your business. Their appealing upside and unrivaled flexibility helps you run your business more your way.

The benefits of joining an RIA firm include the best pricing for your practice (low client and advisor administrative costs), markedly higher net revenue, fiduciary safeguards and numerous options to align business interests.

Let’s say your client subscription fees generate substantial revenue. You could join an RIA firm that allows you to keep 100% of these fees through your own firm as long as they participate in your asset management revenue.

In another case, the advisor runs her/his own advisory models and wants to retire in five years, but feels his adult child successor would be more successful handing off that responsibility. Joining an RIA firm with in-house investment models run by their Chartered Financial Analysts could be a good fit.

With an abundance of options, the due-diligence process becomes more time-intensive and important. This is where recruiters can be invaluable.

While it’s important to review potential firms’ financial and regulatory status, your success and happiness lean on a good personal fit, too. Ask your recruiter how they vet relationships (not just how their recruiting process works) to learn of their expertise and support. What’s the size and number of affiliates they work with and how will your practice directly benefit?

Ultimately you may decide to register your own RIA, but at least you’re now in the driver’s seat. Your options are only limited by the number of quality introductions you engage — but watch for competing interests.

3. Understand your best interest and that of your clients. 

BD administrative fees, especially advisory ones, are charged to advisors; clients significantly fund these enticements, which may crossover to client complaints. Work with someone who wants to reduce your practice fees to new standards.