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For Independent Financial Advisors, Challenges Often Outweigh the Benefits

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Challenges Often Outweigh the Benefits

Written by: John Pierce | Stifel

Once the allure of independence wears off, financial advisors may find themselves getting bogged down in the minutiae of running their own advisory.

For many financial advisors, especially those at wirehouse firms, the call of independence can be alluring. With the potential for higher pay and the promise of greater autonomy, it’s easy to understand why; however, many find that the reality of independence doesn’t play out the way they imagined. Making the leap from a large bank to independence can be likened to jumping out of the frying pan and into the fire.

Between the high level of assumed risk and the surprising amount of behind-the-scenes gruntwork, independence can often be more trouble than it’s worth. That leaves entrepreneurially-minded financial advisors in a tight spot; though they feel stifled at large banks, independence can be overwhelming. I spoke with formerly-independent Stifel advisors Glenn Magloff and Alan Login about the ups and downs of independence, and why Stifel is the perfect middle ground.

The Pitfalls of Independence

While advisors are often attracted to the freedom of independence, without the substantial resources and support of a larger firm, the everyday minutiae can quickly become overwhelming. That’s what Shrewsbury, New Jersey-based Login learned the hard way when he left a large bank to go independent. “The payout at an independent firm is higher,” he explains, “but everything else is negative.”

Magloff, who’s based in Jacksonville, FL, had a similar experience with independence; he says that although pay can be better in an independent setting, it comes with a price. That “price” is often a poor work-life balance, as independent advisors can expect to log countless hours completing administrative and compliance work.

“Nine times out of 10, you’d be better served working in an environment that’s best suited for you,” says Magloff.

However, it’s not just advisors who may suffer when they go independent; their business can, as well. “Clients get concerned when they’re working with an independent practice,” Magloff explains. “It’s quite apparent that if something were to happen to me or my partner, it was going to be a challenge to continue servicing that client because we didn’t have the resources of a larger firm backing us.”

Login echoes Magloff’s frustrations with independence. On top of clients’ reluctance to trust an independent practice, Login found that he struggled to compete on price. “I was competing with wirehouse advisors for business,” he explains. “No matter what I offered clients, somebody had already said they could get it for a lower price. I was running into that everywhere.”

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Finding Their Way to Stifel

Eventually, after several years of independence, Magloff and Login began pursuing other options. However, both advisors felt apprehensive about handing over their independence to a firm. In their search process, they each sought out a firm that would allow them to maintain autonomy while backed by an easily accessible home office and the research resources of a larger institution.

That’s how both landed at Stifel. Login had previously heard of Stifel because one of his clients traded Stifel stock. Magloff was similarly interested in Stifel due to its positive reputation. “What motivated us to look at Stifel was their reputation, their research, and the ability to have an entrepreneurial attitude. Stifel didn’t push product or push a certain way that business had to be done,” he says.

Both Login and Magloff describe their transition from independence to Stifel as smooth and relatively free from complications. Magloff in particular notes the strength of the onboarding team: “From the very beginning, a strong team of individuals guided us through each process, including being on-site for a full week to further aid in our acclimation. There was never a response of ‘we can’t.’ Instead, it was ‘we’ll find a way to get it done.’ Having experienced this process at other firms, as well as recruiting advisors from the competition, I had never experienced anything that could compare.”

Both advisors couldn’t be happier with their decision to join the Stifel family. “Now, rather than spending a portion of our day dealing with technology issues, compliance, and not to mention the issues of running a business, we’re able to focus on managing our clients’ assets and growing our business. Stifel’s support from every department has been outstanding and extremely responsive,” Magloff says.

Login agrees; “Compared to every other firm I’ve ever worked for, Stifel has everything you need, minus the negatives.”

Related: How to Gain the Technological Edge in Independence

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