Is It (Finally) Time to Go Independent?

Is It (Finally) Time to Go Independent?

Going independent. You’ve been thinking about it for years, but something has always stood in the way.


The safety of a big organization. The familiarity with the people, technology, and processes. The comfort of not having to manage all the details of a small business. And yet you keep wondering: Is independence for me?

If those thoughts have crossed your mind, now may be the perfect time to explore your options. The reason? Not only could the move fatten your paycheck, but the industry is changing at light speed, and much of that change has created an environment that’s more supportive of independent advisors than it has ever been. Here are just a few things that make it worthwhile to ponder your next move:

The DOL fiduciary rule.


This has been coming down the pike for a while, and though some are hopeful that a new administration in the White House will delay or even stamp out the restrictions on commissions in retirement accounts completely, most everyone agrees that the shift to fee-based is inevitable—even if it doesn’t happen immediately. In the past month, many of the biggest players have laid out their plans for a post-DOL rule world. Capital One Investing, JPMorgan Chase, Merrill Lynch, and Wells Fargo have all said they are not allowing commission based product sales in retirement accounts. Morgan Stanley and Raymond James are among the few that plan to continue to allow commissions for IRAs (which may put them and their advisors at risk). Going solo gives you the freedom to make your own choice regarding commissions and fee-based business moving forward based on your assessment of the risks and your ability to manage them And with the rule set to go into effect April 10, you have no time to waste.

Hybrid fee options.


As a result of the pending DOL rule, commission-based firms have been scrambling to find solutions that help maintain their revenues while complying with the new regulations. Luckily, there’s been a boon in platforms that offer RIAs the ability to operate their own fee-based business while leveraging a broker-dealer for commission-based products. At the same time, some independent broker-dealers have created their own hybrid platforms to offer in-house custody and services or partnerships with "outside" fee-based custodial platforms. Both types of options ease the transition to a fee-based business—while keeping you in business in the interim. 

New technology and research solutions.


One reason many advisors chose to go with wirehouses in the first place was to gain access to top-notch technology and in-house research. But oh, how times have changed. As technology has advanced in the past decade, you’d be hard pressed to find a technology solution you can’t access as an independent. From clearing house, to asset management, to robo-advice platforms, technology is readily available—and at a price an independent firm can actually afford. The same goes for research. For advisors who take a more tactical approach to investing, smart, original research on the economy, stocks, and market trends is a vital part of the business. The menu of proprietary research providers seems to grow every day, so finding a firm that aligns with your own investment philosophy can be a simple task.

RIA-friendly products.


In the days when the wirehouses controlled the lion’s share of assets, most product sponsors geared their models toward these national firms. But as the pool of RIAs has grown, independent advisors have earned much greater influence. A 2015 IAA/SRS study estimated that there were 11,473 SEC-registered advisors at the time, managing $66 trillion. Any sponsor would be foolish to ignore those numbers. And they haven’t. Today, sponsors are designing products to work for organizations of any size and model—including broker-dealers, RIAs, and hybrids. When it comes to what types of products you can access for your clients, the sky is the limit – even as an independent.

The happiness factor.


In the end, this may be what matters most: What’s going to make you happy? Almost every independent who has made the move from a wirehouse environment will tell you that the primary reason they jumped ship was to gain the freedom to serve their clients better. No product restrictions. No sales goals. No commissions. Yes, going solo means you have to manage a small business, and whether that business is an ice cream shop or an RIA, being a small business owner requires a special skill set. You have to manage you own books hire your own staff, manage your own compliance, but you also have the freedom to control your own brand, set your own goals and, ultimately, be your own boss.

If you smile just thinking about it, it’s time to dig deeper, because from product to compliance to back office processing, it’s never been easier to go independent.

Bill Acheson
Investing in Life
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Bill Acheson is the Chief Financial Officer of GWG Holdings, Inc. Mr. Acheson has over 25 years of sophisticated financial services expertise. Mr. Acheson has extensive experi ... Click for full bio

Are Your Clients Failing to Plan for the Costs of Long-Term Care?

Are Your Clients Failing to Plan for the Costs of Long-Term Care?

Written by: Matthew Paine

It’s been a tough few years in my family. My mother has been battling cancer for what feels like forever, and while she’s been managing her health with diet and exercise for some time, a few months ago everything changed. Her cancer had become aggressive, and chemo, which she had dreaded, was suddenly the only real option. My mother is in her late 70s, so the already brutal side effects of chemo resulted in a prolonged hospital stay that is currently at four weeks and counting. The good news is that she’s mentally strong, and she’s battling like a lion.

My dad is another story. Suffering from early-onset dementia, his ability to understand what’s happening and why my mother isn’t at home shifts from day to day. Because he’s unable to drive or care for himself (at least predictably), my siblings and I have been juggling taking care of him ourselves. It’s not an easy task, especially with jobs, children, and lives of our own to manage as well.

Like many families, none of us—my mother, my father, my siblings or myself—saw our current dilemma coming our way. Clearly we should have. My mother hasn’t been in top health for years. My dad’s condition is sure to get worse. And even if both of them were in perfect health, their age alone should have driven us to communicate better, earlier, and smarter. Despite being in the financial services industry myself, I haven’t been involved in my parents’ finances. I know they saved well for retirement, but I don’t know where they stand financially today. I don’t know what or how much insurance coverage they have. I have no idea how they plan to pay for their long-term care—or if there even is a plan.

The situation is forcing our family to get personal—and fast. Despite being careful about nearly every other aspect of our family’s financial lives, this one slipped through the cracks. We failed to plan.

Just like cancer and dementia, this failure to plan is an epidemic. And it’s only getting worse. To help your clients battle this epidemic, it’s vital that planning for long-term care become an intrinsic part of your retirement planning process. Here’s why:

Retirement planning alone isn’t sufficient.


We’ve all seen it. A client has a great retirement plan in place, and suddenly life throws an unexpected curveball. The later in life your clients get, the more likely that curveball will be the need for long-term care. According to the National Center on Caregiving, the number of people needing long-term care will hit a shocking 27 million by 2050. And according to the AARP, one in four people age 45 and over are not prepared financially if they suddenly required long-term care for an indefinite period of time. That statistic alone tells us that our efforts at planning are failing.

Long-term care costs are escalating rapidly.


According to a 2016 survey from Genworth Financial, a private nursing home room costs just over $92,000—about $7,698 a month—which is 19% more than it cost for the same care in 2011. According to the AARP Public Policy Institute, lost income and benefits over a caregiver's lifetime is estimated to range from a total of $283,716 for men to $324,044 for women, or an average of $303,880—and less than 10% of that care is expected to be covered by private insurance.

Medicaid isn’t the answer.


Many people assume that public programs are the answer to long-term care, but in the case of Medicaid, a program designed to assist the poor, it is a last resort. First, while nearly everyone over age 65 has Medicare coverage, that program doesn’t cover long-term stays. That means that many people who need that coverage are forced to spend down their assets until they qualify for Medicaid. How poor must a patient be to receive benefits? In order to be eligible for Medicaid benefits, a nursing home resident may have no more than $2,000 in "countable" assets, and the patient’s spouse—called the "community spouse"—is limited to one half of the couple's joint assets up to $119,220 (in 2016) in "countable" assets. The result: even a couple who has spent a lifetime saving for a comfortable retirement can be forced to draw down nearly all of their assets before qualifying for Medicaid.

Once on Medicaid, long-term care patients lose the one thing many seniors care about most: choice. As a recipient of public assistance, patients rarely have a say in where they receive care. Whether that means being placed far from family, in a less-than-desirable facility, or even in a facility that lacks certain types of care (such as a dementia unit or other specialized care), the patient is at the whim of the state.

The good news is that even for those who feel there’s no light at the end of the tunnel, there are options that can help seniors who are struggling to pay for their post-retirement care to not only cover those rising expenses, but to do so in a way that gives them the freedom of choice. A Veteran myself, I know that VA Benefits are highly underutilized—including long-term care benefits. You can learn more about these benefits here. As well, the National Association of Insurance Commissioners (NAIC)’s July report Private Market Options for Financing Long-Term Care Services offers a variety of options for helping finance long-term care needs. Included in that list is the use of life insurance policies to help to fund long-term care expenses—an approach that is supported by GWG Life’s LifeCare Xchange Program.

Related: NAIC Sees Life Insurance as a Viable Solution to Long-Term Care Costs

In my own situation, I know there’s a high likelihood that my dad will eventually require skilled nursing care. I hope that as my siblings and I begin to dig into the details of my parents’ estate, we’ll find that they have indeed planned for long-term care. If that’s not the case, I’m comforted to know there are options available to help ensure Dad is not only in a facility that can meet his specialized needs, but that his new home is where our family chooses for him to be. Life may throw its curveballs, but at least Dad’s care will count as a home run.

Matthew Paine is Senior Vice President at GWG Holdings.  Mr. Paine started his financial services career with AXA Advisors, developing marketing strategies for the North Central Region and building his personal practice. Since 2008, he has lead sales teams in raising capital in various assets classes ranging from the Life Insurance Secondary Market, Multi-Family Real Estate, Conservation Easements, and MBS Hedge Funds/Fund of Funds. Mr. Paine has a BA in Marketing/Management from the University of St. Thomas in St. Paul, MN and holds FINRA Series 7, 24 and Series 63 licenses through Emerson Equity, LLC. Member FINRA/SIPC.
GWG Holdings, Inc.
Investing in Life
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GWG Holdings, Inc. (Nasdaq:GWGH) the parent company of GWG Life, is a financial services company committed to transforming the life insurance industry through disruptive and i ... Click for full bio