Who Controls Your Balance Sheet?

The Importance of Independence in the Financial Industry

Maintaining control over one’s balance sheet is critical for financial advisors, by allowing them to make decisions based on their values and goals, free from external pressures. It is becoming imperative for financial advisors to consider their future as mergers and acquisitions continue to disrupt advisors and ultimately their clients. 

The recent consolidations in the Broker-Dealer and RIA space will continue at a rapid pace and have resulted in thousands of advisors facing new contractual agreements and cultures. These types of M&As create an opportunity for advisors to review their business model and become independent, where they can make decisions that align with their values and goals rather than being controlled by outside forces and allowing someone else to dictate their future. Additionally, “In a survey of 421 wealth managers, 70% reported having considered alternatives to their current platform arrangements,” and 85% stated they would change if an appealing opportunity arose. (Prince, 2024)  

In this environment, larger firms often entice and recruit advisors with financial incentives to join their ranks, frequently accompanied by multiyear lock-ins. While the prospect of enhanced capacity and resources may be alluring, advisors who sign contracts for financial gain essentially enter into a one-way trade. In doing so, they are giving up their independence and the ability to control their future. In some cases, they must give up a percentage of ownership. These agreements leave advisors vulnerable to the whims of others who maintain their balance sheet above the advisors, this limits their options and hinders their ability to adapt to the constantly evolving market.

One of the more concerning aspects of this trend is the potential violation of the fiduciary standard of a fee-based advisor. As professionals in the financial industry, advisors are responsible for acting in their clients’ best interest. By allowing someone else to control and limit their options, they are not only putting their own interests above their clients’, but they are also neglecting their fiduciary duty.

For example, let’s say an advisor decides to move to a new firm and accept incentives with conditions via a contract. Most often in this process the advisor ignores the cap table of the new company. If the firm is backed by an entity that is solely focused on making deals to survive or please shareholders and analysts, this can be a costly mistake. Sometimes, the new firm and culture may even be “built to sell,” meaning that the advisor’s business is now just a “fix and flip” for the new company. This situation puts the advisor’s clients at risk and limits their ability to make decisions that align with their values and goals.

Additionally, by giving in to a low time preference and focusing solely on immediate financial gain, advisors are unknowingly losing their brand value and increasing their regulatory capture. This means that they are becoming more dependent on outside forces and losing their ability to compete in their local marketplace. This can lead to losing control and momentum in their business, hindering their ability to grow and succeed.

Advisors must think from first principles and maintain a high time preference when making decisions about their own balance sheet. This means considering the long-term implications of their actions and prioritizing their independence and ability to compete and thrive in the ever-changing financial industry.

If you are an advisor who prioritizes maintaining control over your business and seeks to continue or initiate growth for your firm, we are eager to connect with you. FocusPoint Solutions can assist you in reaching your objectives while upholding your fiduciary responsibilities and delivering outstanding client experiences. If this sounds compelling to you, let’s talk.

One of the primary motivations behind the establishment of FocusPoint Solutions more than two decades ago was to assist advisory firms in retaining control over their practices, offering support, and safeguarding their unique brand identities. With the backing of the FocusPoint team, our advisors can uphold their individual cultures and shape their own futures.

FocusPoint Solutions empowers advisory firms by enabling them to maintain ownership of their technology, data, and, crucially, their client relationships. We provide comprehensive support by outsourcing non-revenue generating functions such as back-office operations, middle-office support, trading, reporting, and billing.

Yet, our commitment extends beyond these services. Another fundamental aspect of our company is our dedication to aiding advisors in growing their practices as an ongoing component of our partnership. Our team collaborates with advisors, providing expertise in executing marketing and sales strategies, harnessing technology, establishing strong brand identities, facilitating succession planning, navigating merger and acquisition opportunities, managing human capital, and more. We stand as your steadfast allies throughout the entire journey toward sustainable growth.

To take the next step, email us or call us at (866) 201-3034. We look forward to connecting, learning about your unique situation, and exploring the possibilities together.


Prince, J. D., & Prince, R. A. (2024, March 26). 70% Of Advisors Are Considering Changing Platforms. Financial Advisor Magazine. Retrieved March 29, 2024, from https://www.fa-mag.com/news/many-advisors-are-considering-changing-platforms-77460.html

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