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The Independence to Choose Your Path and Partner

Leave the attempts at one-upmanship to the wirehouses.

With all the positive energy being generated by the ongoing march toward independence in wealth management, it’s an exciting time to be in the advisory space. So many wirehouse advisors are choosing the title of “business owner” vs. “employee”—and there’s a rising wave of established independent firms that continue to build upon their proven success. The independent wealth sector is emerging as the model of choice for both clients and advisors. In fact, Cerulli estimates that by 2023 there will be more client assets advised by independent wealth advisors than by wirehouse advisors.

It was recently brought to my attention that an industry business development officer was trying to promote the notion that “full” independence could only be found by subscribing to his firm’s particular flavor of independence. As an industry, we’re better than this, and we should be very careful about embracing this type of scarcity mindset. For independent wealth management to thrive and reach its full potential, it’s essential that we promote a growth mindset along with a culture of choice and collaboration.

Under the captive model, clients typically rate the wealth advisor profession very low, and the great service that most advisors provide for their clients is undervalued. The independent model is the opportunity to change that perception. But to clearly articulate how independent wealth practices should be the client destination of choice, we must collaborate, appreciate flexibility and work together as an industry. We should be touting our greater ability to cater to our clients’ needs and best interests, celebrating our growth and pulling together so all of us can fulfill our potential. A rising tide lifts all boats, but every independent advisor has their own path to choose—a business model that fits their clients’ needs and aligns with their goals and their personal values.

Choosing a path for independence—whether just starting out or preparing for the road ahead—is no different from how we counsel our clients to look at their financial plans: it’s a customizable opportunity to achieve the financial future they desire. A successful and enduring independent sector is about vast choice and that is best achieved by collaborative competition.

One of my favorite things about moving to the independent space after 20+ years as a senior leader in the wirehouse sector is the collaboration that exists in the independent community. There are a lot of options out there for independence-minded advisors: Sanctuary Wealth, Hightower, Kestra Private Wealth Services, LPL Strategic Wealth Services and Carson Wealth, to name a few. Some advisor teams find our flavor of independence best, while others choose a different option. Most importantly, win or lose, we collaborate to make the entire independent space stronger and the destination of choice for clients.

Variety among independent business models creates different types of benefits, and advisors should explore which relationship most closely matches their vision. While there are key differences between models, what’s essential to making the best choice is having a clear understanding of basic benefits, like freedom and flexibility, the transfer of risk, economies of scale, intrinsic value of services and cultural fit. Transparency is important in helping advisors understand their options as they choose which path forward is the right fit for themselves, their firm, their team, and, most importantly, their clients. The wirehouse environment is not known for transparency—whether the topic is advisor compensation or account fees. That environment also feeds off an intensive competitiveness between firms, creating a sharp-elbowed atmosphere where a focus on quotas and profits dilutes the genuine passion advisors have for delivering on their clients’ objectives today and in the future. Clients have voted on that mindset and model, and they don’t give it high ratings.

I believe the independent advisory space should cultivate a community in which we all excel at delivering the best solutions for our clients—which would result in greater rewards for all of us. Let’s leave the attempts at one-upmanship to the wirehouses.

As providers, partners and advisors in the independent space, we should seize this opportunity to focus on our clients, continue to develop and design the solutions they need. We should continue to offer the different variations of our business models to best equip our advisors with the support and partnership that best fits their vision for achieving their fullest potential. The name of the game in independent wealth is choice. That’s not defined by the name on an ADV, but by the experience your clients describe when they’re talking about their most trusted advisor—you.

One of my favorite lessons from my high school coach still applies today. “Blowing out someone else’s candle doesn’t make yours shine any brighter.” To reach our full potential and be the preferred wealth management destination for clients, choice is essential, and collaboration is king.

Jim Dickson is CEO of Sanctuary Wealth.

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