Our industry has shifted significantly toward the fee-based or fee-only business model over the past few years. And an ever-growing number of advisors continues to contemplate making the move to independence. Working for many years alongside advisors on this journey has allowed us to gather hands-on insight throughout those transitions. Last month we shared some tips to help advisors who are seeking to move to a more independent business model. We received some very positive feedback from advisors who asked that we consider adding a follow up to that message. And so, if you are considering the path to independence for yourself, here are a few more thoughts that we hope will help to guide you more smoothly along the road:
Why do you do certain things today? Just because your current processes and practices made sense in the past doesn't necessarily mean they still do now. Exploring outside your comfort zone can be uncomfortable at first, but pushing yourself to do this will likely help you identify options that much better suit your needs today.
Last month we mentioned reconsidering your client fee structure. To expand on that idea, take out a yellow pad and brainstorm everything you've ever done for your clients. For example, do you design gifting strategies for your clients? Do you review insurance policies for them (even if you're not the one who writes the business)? It's probably going to be a long list, and that's the point. You may only do nine or ten of the things on this extensive list for each of your individual clients, but of course you likely offer everything you've written down here to all of them—and the potential for you to handle anything and everything on this list for your clients is included in the cost to retain your services and expertise.
This exercise of identifying all that you can do and offer your clients can often be quite eye-opening and rejuvenating for advisors. No one is suggesting that you raise your fees, but as you consider becoming the owner and operator of your RIA, it's really imperative that you determine the right fee structure (meaning you feel it's fair to you and your clients…and you're comfortable charging it).
What percentage of your business is fee-based versus commission? Is that how you want it to stay, or would you like to transition more accounts to a retainer or fee situation? If you're with a broker/dealer, when you look at your numbers, is the level of support you receive from them in line with what you pay? If you were able to convert smaller, commission accounts to fees (without being limited by account minimums) would that make a difference? And finally, if you decided to form your own RIA, consider what dual registration (with both FINRA and either your state or the SEC) would look and feel like.
Talk with other like-minded advisors (those who have had success going fee-only and/or those who have chosen to maintain a broker/dealer relationship).
Whose practice or lifestyle would you like to emulate? Successful advisors are usually more than willing to tell you about their experiences—including
what they'd do over if they had the chance and what they did right the first time around. Many advisors who make the transition to total independence
are pleased with not only being able to simplify their business
If you're like most advisors, you're highly trained, extremely skilled, enormously caring, and incredibly passionate about providing a
The problem is that the nature of the financial advisory business over the past several years has put most advisors into a reactive mode. Rather than utilizing a well-defined, systematic approach, they are struggling to keep up with a never-ending stream of change—and grappling with how to redefine their practices. They barely get through the workload on their desks, let alone create the time they need to pay attention to larger goals.
On this note, ask yourself some questions like: Which of your team members do you plan to have
Some advisors love having a large team; others prefer to manage very
Click here for more on making a successful transition to independence. Or here to see some real-life case studies involving advisors we've helped to successfully transition to the business models they were seeking. And here to view a complete list of the outsourcing services we offer advisors.
“I wanted more balance. And I wanted to remove myself from a lot of the day-to-day operational side of this business—trading, research, all the functions of investment management — which is how I get paid but it certainly isn’t where my passion lies.”
Once a month, we send out a success story or a practice management idea aimed at helping independent advisors become more productive and profitable.I'm interested in staying informed