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 Chief Financial Officer of GWG Holdings, Inc. Bill is ideally suited to inform financial professionals and investors about specialty finance, alternative inves ... Click for full bio

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