flying independent

Your Journey to Independence Starts Today

Advisors contemplating the move to independence have a lot to weigh as the change isn’t for everyone.

Advisors in the banking and broker/dealer world know their ability to holistically and comprehensively advise their clients grows more challenging every day. They see the limitations of their current firm’s products and services platform and the effect it is having on their clients. High-integrity advisors are always putting their clients first, making recommendations that they believe are in the best interest of each client. As your options narrow and your ability to create truly customized solutions for your clients grows more challenging, the move to becoming independent becomes more captivating.

A business school professor of mine used to say, “the long run starts today,” which means make the hard decisions and take the important steps toward your ultimate destination now, not tomorrow. As an advisor contemplating the move to independence, this decision and the process can seem overwhelming. Here are five considerations for advisors who are ready to embark on the journey to independence.

  1. Pick great partners. Your team, large or small, will make or break you, so identify people that share your culture, business philosophy, core values and work ethic. Trust within your team will keep it together.
  2. Clearly define your independence and firm’s value add. It’s critical to really think about why you are going independent and then don’t forget why you made that decision. Document your challenges and use that to design your new firm. Consider what you are going to provide your clients that you cannot today at your current firm. Superior investment solutions, broader credit platform, aggregated performance reporting, comprehensive financial planning and improved client experience are all on the table. You need to decide what is important to you and your clients and then deliver it.
  3. Engage your clients in the process. While it is not advised that you tell them you are planning to start your own firm before you launch, you can have insightful conversations with your important clients regarding frustrations and shortcomings of your current firm. This feedback will help you with the design of your firm and help your clients feel like they were indirectly part of the process.
  4. Don’t be afraid to outsource. While you may want to handle everything in-house, there are a lot of moving parts and some areas where you and your team could use an outside expert to assist you in providing client services. There are a vast amount of high-quality firms dedicated to providing valuable services to startup RIAs. Decide what is critical to perform internally, and hire great firms, vendors and business partners to assist you in the design, launch and operations of your firm. Doing so will allow you to focus on your strengths and not be overwhelmed in educating yourself on every minute item.
  5. You will grow faster as an independent. Many clients will respect the entrepreneurial spirit of your decision and others will quickly get comfortable with the size and safety of the custodian(s) you select to safeguard your clients’ assets. Small is nimble, innovative, responsive, focused and can be easily positioned as a benefit if done thoughtfully. Your organic growth rate will increase once you make your move, with referrals from clients, attorneys, accountants and other sources accelerating over time. Telling your own firm’s story will be powerfully effective because of your passion for what you have created and the benefits for your clients. This will also enhance your close rate on new business. You will also experience inorganic growth with the opportunity to acquire other RIAs and advisors, develop other complementary businesses and provide other revenue-generating products and services to grow your client base.

The path to independence is hard, takes courage and requires planning and commitment, but you will not be alone in the process. There is an ever-expanding cottage industry of vendors and business partners who have a vested interest in your success and will assist you in the design and execution of your new firm. Your passion and vision for the ideal client experience will be the guidepost for your journey.

The long run starts today. You know you can be better. Now go do it!

Jack Petersen is the Managing Partner of Summit Trail Advisors and is a member of the Alliance for RIAs (aRIA). 

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