Are You Willing to Pay and Manage More to be TRULY Independent?

The strive to be an independent financial advisory firm comes riddled with ironies in the wealth management industry.

I question what “independence” means when advisory firms are required to use their institution’s technology to enter tasks assigned the institution’s staff, have documents e-signed, or respond to alerts and notices. And how much labor (money) is spent tracking the progress of tasks you have assigned to that institution in their software?

We understand completely why Broker Dealers, custodians, and outsourcers are requiring firms to use their own technology – it is about compliance. It is also about profitability and reducing labor costs. The more you use the institution’s systems, the less work their staff has to do AND less need for their managers to oversee their work. Less work equates to less labor cost.

So what if an advisory firm was offered two choices regarding technology:

Choice 1: Pay for your own software and pay the institution more money. The extra fees will pay the institution’s compliance team to review documents and service team to manually enter requests into their technology to then process.

Choice 2: Use the institution’s technology and pay them less for servicing and reduce your expenses.

or Staffing:

Choice 1: Pay more to the institution to use their staff while having less control over the pace of progress and quality of servicing.

Choice 2: Pay less to the institution and more to your own staff to enter tasks and service the clients. You will have more control over the pace of progress and quality of servicing. You will also spend more time managing staff and less time on business development.

If you still can’t choose, pretend you are a client of your firm and choose:

Choice 1: Pay more for financial planning because your advisory firm has to manually collect and enter data into the financial planning tool

Choice 2: Pay less for financial planning and self-enter bank account credentials or values, mortgage balance, credit card balance, etc into your planning or data collection software


Choice 1: Pay more for the advisor to email or mail the investment report and communications

Choice 2: Pay less and view investment performance reports and messages in the advisor’s online portal

How do ya like them apples?

As you consider your own passion for being TRULY independent, you might want to consider what level of independence you want. And what is the impact of this decision on your business?

If this is too much for you to think about, please feel free to distract yourself with a short clip from Good Will Hunting’s “how do ya like them apples ” and forget about this mind numbing blog post on determining you and your client’s independence.

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