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

Most Read IRIS Articles of the Week: April 17-21

Most Read IRIS Articles of the Week: April 17-21

Here’s a look at the Top 11 Most Viewed Articles of the Week on IRIS.xyz, April 17-21, 2017 


Click the headline to read the full article.  Enjoy!


1. Market Keeping You up at Night? Look for the Right Hedge


Like so many others in the industry, I was wrong. For years, I was certain that the bull market was nearing its end. I thought the market was over-extended, and that, surely, the wild equities run was coming to an end. But everyone else was bullish, and perhaps rightfully so. And while I’ve watched equities continue on their spectacular rise, I do think now is the time (really!) to put a hedge in place. Here’s why. Here’s how. — Adam Patti

2. How to Manage Bond Market Pain and Seek the Gain When Rates Are Rising


The realities for fixed income investors have changed. How is this being reflected in markets? Bond investing has become increasingly difficult over the past decade. Markets have been heavily distorted by ultra-low interest rates and quantitative easing, as well as by extreme risk aversion in response to the global economic crisis and the eurozone debt crisis. — Nick Gartside

3. Seven Reasons You'll Fail as a Financial Advisor


Is being a financial advisor worth it? I am an optimistic person and I encourage other people to keep a positive mental attitude (shout-out to Napoleon Hill and W. Clement Stone). However, by taking a good, hard look at the negatives in life, we can successfully pivot towards the positive aspects that will help us achieve our goals. — James Pollard

4. The Secret to Turning Every Prospect into a Client


How do you treat one of your most valued, existing clients? Here’s a list of some things that come to mind. — Andrew Sobel

5. Why Do Clients Change Advisors?


According to many advisors I speak with, the only clients that leave are those who have died. And while attrition may not be a big problem in this industry, I have to assume that at least a few clients change advisors without doing so via the funeral home. — Julie Littlechild

6. Why You Should Focus on Getting Referral Sources


I was talking with an advisor last week about how to get into conversations about what he does. He was relaying the story of going jogging with a friend who could be a good client but is, more importantly, connected to a large network of people who fit this advisors ideal client description. — Stephen Wershing

7. How Big Picture Thinkers Seize More Opportunities in 7 Steps


Big picture thinkers are not unicorns - rare and mystical. And they were not born with the innate ability to think big. They do, however, pay attention to the broader landscape and take the time to think, analyze and evaluate. — Jill Houtman and Danny Domenighini

8. 5 Actions to Build Your Reputation


Your reputation is who you are and how you show up, Monday to Monday®.  Many of us take our image and reputation for granted.  Give careful thought to the kind of reputation that you would be proud of Monday to Monday® and that would resonate with your purpose and priorities. — Stacey Hanke

9. How Are You Poised to Begin Welcoming GenZ to Your Workplace?


The generational changing of the guard is a fact of life as old as time. Young replaces old in responsibility, importance, control and culture. Outside of the family, the workplace is perhaps where this is seen most regularly by most people. — Shirley Engelmeier

10. Are Price Objections REALLY Price Objections?


Next time you hear your prospects give you price objections, it’s not because of the price. The give price objections because they don’t know the full value proposition that they’d be paying for. And it’s not based on their need, or your features and functions. It’s based on the buying criteria they want to meet internally. — Sofia Carter

11. Understanding the Economic Value of Transition Deals


Last week we wrote about the economic rationale behind going independent vs. moving to another major firm as an employee. As a follow-up topic, we thought it prudent to analyze transition packages attached to big firm moves and peel back the layers of the onion to show the components of these deals. — Louis Diamond

Douglas Heikkinen
Perspective
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IRIS Founder and Producer of Perspective—a personal look at the industry, and notables who share what they’ve learned, regretted, won, lost and what continues to ... Click for full bio