Seeking Independence? Three Key Factors That You Need to Consider When Making a Transition to an Independent Financial Advisory Firm

Change is all around us, and especially in the world of financial services. We have all heard the stories of our fellow advisors leaving one firm for another, or going from a wire-house to an ‘independent’ broker-dealer. Is this newly touted independence really all that it’s cracked up to be? As a transition specialist that helps financial advisors who are seeking a change in their business platform, I get calls on a daily basis from individuals and teams inquiring about going independent. So what does it really mean to be an independent advisor today? And for that matter, why is it important?

To help those of you who may be considering a move to a more independent financial advisory business platform, the following are the three key elements that I look for in a new firm when helping a client assess a new opportunity for their business.


High payouts are often a premium feature that many independent broker-dealers offer. Make sure to inquire into the details of what the firm would require of you to receive that highly touted high payout. Some firms have a quota of financial plans you must provide. Others require advisors to place a certain amount of assets or volume of business to a particular platform. Broker-dealers and firms are increasingly dictating how an advisor serves their clients by incentivizing behavior that is profitable to the broker-dealer or firm.


Maintaining full control of their business model is often a high priority for many of my clients. So as you are performing your due diligence on a new independent opportunity, make sure you carefully read the fine print in your advisor agreement. Ask questions like; what is the process and cost required to transition a client out of the firm? What information can be taken when you leave? I’m sure you don’t go into a new firm relationship expecting to leave; however the industry changes at a fast pace, and so does your business. You need to make sure that you will still have the ability to control your own data, charge the fees your clients want to pay, and present your business model in a way that best demonstrates the firm’s unique value.


There are many elements of your business that you will want to ensure you are still able to maintain and utilize upon arrival at your new firm. For example, are you going to still be able to choose the best elements of a technology suite at your new firm? Is your choice of clearing/custodian chosen or dictated? While there are times it is irrelevant and the services function effectively, there are times that a lack of choice can hamstring your business. In efforts to expand and increase services, firms increasingly dictate who, what, and how we service our clients.

Financial advisors are consumers in a supermarket of broker-dealers, custodians, and firms. Many of these solutions are very effective partners in executing your business model. However, if you are an advisor considering making a move to independence, you must be a savvy shopper if you are going to protect the core integrity of your business.