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June 22, 2023 at 01:36 PM
What You Need to Know
- Many advisors get stuck in the belief that there aren't any options between the status quo and full independence.
- In an evolved industry landscape, there are more options to strike the right balance of autonomy without going fully independent.
- Some may find the right level of independence under the auspices of a wirehouse, while others may find their fit with a boutique model.
Here are a few common remarks from many employee advisors we speak with:
“I want more freedom and control over my business, but I don’t want to be a business owner.”
“I want more independence, but I don’t want to sacrifice the support and community I’m used to.”
“I would be happy if my firm just left me alone and let me serve my clients’ needs.”
These advisors want a sense of ownership over how they run their practice — including the ability to hire and fire team members, distinguish themselves from their colleagues by marketing their business creatively and run their practice without as much interference from the compliance team.
Becoming an independent business owner may solve these challenges, leading many advisors to start their exploration process with that notion in mind. More often than not, however, advisors discover that going independent comes with a lot of work, from the initial setup to the ongoing management of the day-to-day minutia.
Plus, they would be passing up on monetizing in the short term by eschewing a large transition package. Add in the startup costs associated with setting up a business, and many advisors conclude that independence is just a bridge too far.
It’s at this juncture that these folks often get trapped by inertia — stuck in the belief that there isn’t a better option between the status quo and independence.
The good news is that in a greatly evolved industry landscape, many advisors are finding that they can strike the right balance between the autonomy they seek and the scaffolding of a W-2 employee model.
In fact, in our most recent Transition Report for Advisors, we determined that wirehouse, regional and boutique firms have all added a meaningful number of talented advisors because each offered what advisors desired to achieve their goals with greater control.
The truth is there are stark differences between the cultures, business models and levels of advisor empowerment at various firms. It all depends on what an advisor is looking to solve for and how a firm’s value proposition rises to meet their specific needs.
What does more control look like for an advisor at a wirehouse, regional or boutique firm?
The Wirehouse Perspective
While some may think that moving from one wirehouse to another is more of a “lateral” move, there are still those who find the right level of independence within a large entity — especially with a big brand name behind them.
Take Vincent Finney, Ryan Bibler and Joseph Panfil, for example; they’re former UBS advisors managing $800 million in assets under management, who were looking to achieve greater freedom and control and decided to move from UBS to Wells Fargo’s Private Client Group.
As they shared with us in a podcast episode, even as employees at UBS, they looked at their business as business owners. The team never felt that being an employee of a firm stopped them from running their business in the way they wanted to.
That is, each of the three partners has equal equity in the business they created and their own “roles and responsibilities” with equal say in their vision for the future.
But things started to change. First, UBS left The Broker Protocol for recruiting. This action signified the firm was taking more control away from the advisors and indicating that UBS owned their client relationships when, in fact, the team built the practice based solely on their own hard work. And the team felt their vision was no longer congruent with the firm.
