You’ve got a vision of what you want your practice to be. The corporate environment is too restrictive to really deliver the experience your clients want from you. You want more for yourself, your people and your followers. But making the decision to go independent can feel a little overwhelming.
“A good advisor knows their strengths…A great advisor knows their limitations.”
You know you want to build equity in your own client relationships and your practice. You want to own your own firm. But knowing what you want is only half the battle. Admitting that you don’t know what you don’t know is the other half.
In this comprehensive guide, we’ll go over how to become an independent financial planner, the benefits of independence, tips for your transition and finally – how IFG can help you.
According to a recent study, an impressive 38 percent of assets managed by advisors are now held by independent advisors, showing a notable increase of 6 percent over the past decade. (DiamondConsultants) This movement highlights a clear trend toward independent financial planning and away from the traditional wirehouse model.
6 Signs Going Independent is the Right Move
Considering a departure from the wirehouse as a financial advisor can be a daunting task, given the abundance of alternatives and the intricacy of timing the shift.
Recognizing the right time to move away from the wirehouse’s inflexible structure can be as crucial as knowing the right next steps. If you’re contemplating if it’s time to leave the “safety” of the wirehouse and tread towards autonomy, here are six signs to look out for:
- The wirehouse’s “one-size-fits-all” management style no longer suits you:
The vast scale of most wirehouse advisory practices means advisors often find themselves under a uniform, top-down management style. This model can be beneficial in preventing costly errors for new advisors; however, experienced advisors may feel it significantly limits the services they can offer. If you feel confined by this model, financial advisor independence could provide a wealth of opportunities better suited to your clients’ needs.
- Your relationships with clients are stable:
The path to independence is paved with strong client relationships. An advisor turning independent can expect a high level of client loyalty, with an average of 80% of desired clients following them to their new firm, according to a 2023 study by Fidelity Institutional.
But remember, client loyalty is not a given. Taking steps to strengthen your client relationships can ensure you’re ready to hit the ground running in the new practice that you build after going independent as a financial advisor.
- You desire a more supportive, personalized work culture:
In today’s landscape, work culture is paramount. The values, ethics, and client services a firm engages can greatly impact an advisor’s satisfaction. If you’re craving a work culture that aligns with your personal and professional objectives, going independent as a financial advisor could be the answer.
- You have a viable business plan:
With options ranging from supported independence to complete autonomy, there’s an independent path for every advisor’s goals and plans. Understanding your strengths, the services you want to provide, and your pricing model is crucial. If you have a business plan for how to start an RIA that can adapt with your practice, it’s a strong indicator you’re ready to leave the wirehouse.
- You have the right transition resources at your disposal:
Considering a departure from the wirehouse requires a robust support team. Our support teams here at IFG can provide the options, advice, and transition planning for financial advisors to navigate your next steps after the wirehouse. We help advisors effortlessly navigate the complete transition process from start to finish, leveraging our specialized advisor transition services.
- You’re yearning for more autonomy:
Wirehouses bring structure, but they also bring limitations. If you’re yearning for the freedom to make decisions about your own business operations – from investment product choices to marketing strategies – it’s a clear sign you’ve got what it takes for going independent. This entrepreneurial desire is the core of independent advisory.
5 Benefits of Going Independent
According to a 2024 Schwab report, 79% of advisors reported being content with their decision to transition to independence, 76% said they are happier in their personal lives, and 69% wished they had made the move sooner.
Here are five core benefits of embracing financial advisor independence:
1. Independence and Autonomy: The Freedom to be an Independent Registered Investment Advisor
One of the biggest benefits of going independent is the freedom to work for yourself. You have the power to make your own decisions and create your own schedule. This independence allows you to tailor financial planner services to your clients’ needs, rather than worrying about corporate goals or quotas.
Plus, you have the autonomy to choose the products and services that are right for your clients, rather than being restricted by a larger institution’s policies or affiliations. This is a key differentiator for an independent registered investment advisor (RIA) or an independent broker-dealer.
2. Better Earnings: Owning Your Value
Financial planners who choose to go independent typically earn a higher percentage of the revenue they create compared to those who work for larger corporations. When working for larger institutions you could be making half or less of what you would if you were independent.
Not to mention, you can also diversify your streams of revenue as you are free to create your own sources of income. This shift allows you to capture more of the value your labor creates, leading to higher payouts.
3. Greater Client Focus: Embracing the Fiduciary Standard
As an independent financial planner, your main focus is on your client’s best interest. You can customize services based on each individual client’s needs and objectives. Financial institutions are often more concerned with their own bottom line than their clients, which can sometimes lead to them offering products or services that clients might not need.
As an independent financial planner, you have leveled the playing field and your client’s needs are your top priority. Many independent advisors choose to become an RIA, which legally subjects them to a fiduciary standard, meaning they are obligated to act in the best interest of their clients at all times.
4. Stronger Relationships: Trust and Transparency
When operating as an independent financial planner, it is much easier to form and maintain strong relationships with each client. Clients tend to be more comfortable sharing their financial situations and concerns in a setting where they are not being sold a product.
The commitment to acting in clients’ best interests continues to be the primary motivation for advisors pursuing the RIA model. The 2024 Schwab Supported Independence Study highlights that advisors seek this path for the freedom to offer comprehensive, product-agnostic services and keep their clients’ best interests at heart. This focus is well-aligned with client demand, as recent Cerulli research found that 70% of affluent investors expect their advisor to operate under a fiduciary standard.
5. Flexibility: Tailoring Your Practice
Going independent means you have the freedom and flexibility to serve your clients’ needs in the way you see fit, whether that means taking on more complex investments or providing a more personalized service.
As an independent financial planner, you’re in the driver’s seat of your own career and can make the decision you feel is best. You are no longer bound by the restrictions of a large firm, and you can make decisions more easily. You are free to think outside the box and develop new strategies that meet your clients’ unique goals.
You have more leeway to customize your services, so your clients get the attention they deserve. You can also be more proactive and reach out to clients more frequently, so you stay top of mind. In short, going independent as a financial planner gives you the freedom to do what you do best: help your clients achieve their financial goals.
Understanding the Independent Channels: RIA vs. Independent Broker-Dealer
When an advisor chooses financial advisor independence, they generally choose one of two primary business models. Understanding the difference between a Registered Investment Advisor (RIA) and an independent broker-dealer is crucial for your financial advisor transition.
What is an RIA?
A Registered Investment Advisor (RIA) is a firm or individual that, for compensation, engages in the business of advising others as to the value of securities or the advisability of investing in, purchasing, or selling securities.
- Fiduciary Standard: An RIA is legally held to a fiduciary duty, meaning they must always act in the client’s best financial interest. This is a key distinction between a wirehouse and an RIA.
- Compensation: RIAs typically operate on a fee-based or fee-only model, charging a percentage of assets under management (AUM) or a flat fee for planning.
- Regulation: Depending on AUM, an RIA must register with either the SEC (typically over $100 million AUM) or state securities regulators. Learning how to become an RIA involves understanding these licensing and registration steps.
- Benefits: Becoming an RIA offers the highest level of autonomy and allows the advisor to build significant firm equity.
What is an Independent Broker-Dealer?
An independent broker-dealer is a firm that facilitates the buying and selling of securities. Financial professionals affiliated with them are typically registered representatives.
- Suitability Standard: Representatives of an independent broker-dealer are generally held to a suitability standard, meaning the investment must be suitable for the client’s situation, but not necessarily the best option (though Regulation Best Interest has added additional requirements).
- Compensation: The compensation model is typically commission-based on transactions, though many modern independent broker-dealers offer a hybrid model that allows advisors to also act as an Investment Advisor Representative (IAR) under the broker-dealer’s corporate RIA, or even their own RIA. LPL Financial, for example, is a prominent independent broker-dealer. Knowing what does LPL stand for in LPL Financial—which is Linsco Private Ledger—is a small detail, but understanding their model is a big step.
- Benefits: Independent broker-dealers offer more extensive back-office and compliance support than a fully independent RIA, making the transition less complex for some.
The choice between an RIA and an independent broker-dealer depends on your desired level of autonomy, your willingness to manage operational complexity, and the model that best aligns with your commitment to the fiduciary standard.
10 Tips for Your Transition to Becoming an Independent Financial Planner
Cultural shifts have broadened the client base and allowed advisors to customize their practice, making independence a feasible option for all. However, like all new ventures, some lessons are best learned through experience.
Here are 10 tips straight from the mouths of IFG members for going independent as a financial advisor:
1. Prepare Before Taking The Plunge:
The wirehouse model does offer structure, but can limit independent financial planners. Many advisors, overwhelmed by the complexities of an independent practice, often neglect to acquire the necessary professional designations and skills in RIA compliance, communications, marketing and the best financial advisor tech stack that are crucial for a successful transition. It’s also important to have your own finances in order, as income structures can change during the transition.
2. Remember, It’s About People, Not Just Money:
As financial advisors, we help clients grow wealth. But unlike the wirehouse model, independent financial planners should prioritize client relationships over analysis and strategic planning. Maintaining and nurturing client relationships is essential to the success of a new practice.
3. Cultivate A Circle Of Mentors:
The “unknown unknowns” can be the biggest pitfalls for newly independent advisors. Having a network of trusted mentors can help advisors avoid potential hazards and seize unexpected opportunities.
4. Be Prepared For Growth:
Select scalable tools and technology that can adapt as your practice grows. This foresight can prevent the need for major shifts in technology in the future.
5. Do Not Shoulder All The Burdens Alone:
Even the most independent-minded advisors cannot manage every aspect of a new business. Dealing with finding office space, choosing RIA software, ensuring RIA compliance, and managing finances can be overwhelming. Advisors should seek partnerships and leverage the expertise of others to prevent burnout.
6. Determine your niche.
Before taking the plunge, it’s essential to determine your niche and specialization. What type of clients do you enjoy working with? What kind of financial planning services do you want to offer? Are there any particular financial planning tools you excel at? By honing in on your niche, you can more effectively attract your ideal clients and stand out from the competition.
7. Build a strong referral network.
One of the most challenging aspects of going independent as a financial planner is building your client base from scratch. To do this, you need to have a robust network of contacts and begin building relationships with potential clients.
This might involve attending industry conferences and seminars, reaching out to colleagues, focusing hard on your marketing strategies or using social media to connect with individuals in your target audience.
8. Get the right certifications and licenses.
In order to practice financial planning as an independent advisor, you need to have the proper certifications and licenses. This may include a CFP certification, as well as any other licenses required by your state. It’s important to stay up-to-date with the changing regulations and requirements in order to ensure that you are always compliant.
9. Build your brand.
As an independent financial planner, you are your brand. It’s important to establish a strong, professional image that reflects your values and expertise. This might include having a polished website, designing business cards and other marketing materials, and leveraging social media and other digital platforms to build your online presence.
10. Find the right partnership.
As a financial planner, you understand the importance of tailored solutions to meet your clients’ investment objectives. Why not ease yourself into independence with a personalized partnership that supports your business goals?
Consider working with a partner who can offer resources and support for the aspects of your practice that fall outside of your area of expertise. This partner may be another independent financial planner, a broker-dealer firm, or another organization (like Integrated Financial Group) that works with financial planners.
By working with the right strategic partner, independent financial planners can access tools and resources that can help them be more efficient and effective, while also benefiting from the support and encouragement of others in the industry. This can be especially helpful for those who are just starting out in their career as an independent financial advisor, as it can help them build a strong foundation and establish themselves in the industry.
Step by Step Breakdown of Going Independent as a Financial Advisor
If you’re deeply considering making the transition to independence, we’ve got you covered. The following is a step-by-step breakdown of everything you should consider when making your transition.
Step 1: Preparing and planning
When it comes to navigating the planning process, proper preparation is key. Understanding the importance of a smooth transition, there is a wide range of areas to consider under the umbrella of “planning.” To kickstart your journey, it’s vital to get organized.
First things first, determine the date of your resignation and create a timeline for your transition. This will help you stay on track and ensure a seamless handover. Additionally, take the opportunity to organize and update your existing client list. Keeping your contacts and information up to date will support a smoother transition for both you and your clients.
Equally important is sharing the news with your team members. Open and transparent communication is crucial, and your continuing team members should be kept in the loop about your plans.
Collaborating with the right partner is paramount during this process. Selecting a partner who can provide tailored guidance, a comprehensive roadmap, and a curated network of contacts and resources will allow you to fully focus on running your practice efficiently and effectively.
Moreover, expert business consultants can offer valuable insights by analyzing your business and evaluating your strengths. This evaluation will help identify and mitigate potential risks while also uncovering new opportunities for future success. Whether it’s before or after transitioning, relying on their expertise will contribute to a smooth and prosperous journey for your business.
Step 2: Sorting out compliance issues and regulations
When it comes to navigating compliance issues and staying up-to-date with evolving regulations, financial advisors planning to transition must be well-versed in their current firm’s legal obligations and agreements, specifically as they pertain to their existing book of business.
Throughout the transition planning process, having access to legal guidance and support is crucial. Here are several key considerations that must be addressed:
License Update and Transfer:
Having a well-defined plan to update and transfer relevant licenses is essential. This ensures compliance with regulatory requirements while facilitating a smooth transition to the new firm.
Client Data Access:
Under ‘Broker Protocol‘ regulations, it is important to determine the extent of client data that can be legally accessed and utilized. Understanding the rules surrounding this aspect is vital during the transition process.
Regulatory Updates:
Staying current with any regulatory updates or changes related to transitions is essential. Being aware of new regulations and regulatory developments allows for proactive compliance and seamless navigation of the transition.
Choosing the right partner to support you during this transition is of utmost importance. Look for a partner that offers the following:
Compliance Services:
Ensure that your chosen partner prioritizes your compliance by providing comprehensive compliance services. This includes training, expert knowledge, and automated processes, tools, and technology to ensure you remain legally compliant without losing excessive time and resources.
Education and Growth:
Select a partner that offers ongoing training and learning experiences to keep your practice evolving and growing. This includes staying abreast of changes in technology, trends, markets, regulations, and client expectations.
By addressing these considerations and partnering with the right firm, financial advisors can navigate the legal aspects of transitioning smoothly and efficiently.
Step 3: Managing client relationships
Your clients put their trust in you and highly value your guidance. It’s highly likely that they will choose to follow you to your new independent practice.
However, they may have concerns regarding how this transition will impact their communication with you, their investments, and their costs. Before reaching out to the investing clients you hope to bring along, it is important to have a strategic plan in place:
- Identify the clients you wish to continue working with and those you do not.
- Prioritize your contact list and be ready to address any questions or uncertainties your clients might have about your decision to change firms.
- Develop comprehensive plans specifically tailored for clients who wish to retain your services as their financial advisor.
Moreover, it is crucial to select the right transitioning partner who can offer the following:
- Access to technology solutions that provide advisors with a wide range of tools to meet their clients’ investment goals, alongside a diverse set of options.
- Exceptional service and support to navigate any challenges that may arise during the transitional onboarding process. With an efficient and specialized team of service professionals, advisors can keep their clients well-informed and confident at every step.
By selecting a reliable partner like IFG and implementing a well-thought-out strategy, your continuing clients will enjoy the same level of support that you and your team receive.
Top 7 Financial Advisor Transition Concerns
The prospect of going independent as a financial advisor can evoke a mixture of excitement and transition concerns. If you feel any of the following transition concerns, you’re not alone.
1. It takes too much time away from my business and my clients.
One of the foremost concerns financial advisors often express when contemplating a transition to independence is the fear that the process will consume too much time, detracting from their focus on existing clients and business operations. The anxiety surrounding this issue is understandable; maintaining client relationships is paramount, and any disruption could jeopardize their trust and loyalty.
However, it is crucial to approach the transition with a strategic plan. By allocating dedicated time for the transition and leveraging tools and support systems, advisors can minimize downtime while ensuring that their clients continue to receive the high-quality service they expect.
With the right strategic partnership, the transition can be managed effectively without sacrificing client care, ultimately paving the way for a more fulfilling and sustainable independent practice.
2. I’ll lose clients and/or burn bridges.
Another significant concern that financial advisors face when transitioning to an independent practice is the fear of losing clients during the process. The uncertainty that comes with change can lead clients to question their advisor’s stability and commitment. Advisors may worry that their clients might feel insecure about their financial future if they perceive any instability or disruption.
To mitigate this risk, effective client communication is key. Advisors should proactively reach out to their clients throughout the transition, reassuring them of their continued dedication and the benefits of the move.
3. I’ll be starting from scratch.
Another common fear for advisors when transitioning to an independent practice is the idea of starting from scratch. Many worry that they will have to rebuild their entire client base and establish a new reputation in the industry.
While this may seem daunting, it’s important to remember the potential benefits that come with independence. As an independent advisor, you have more control over your business and can tailor your services to better meet the unique needs of your clients. This can ultimately lead to stronger relationships and increased satisfaction for both you and your clients.
4. I’ll be required to handle my own compliance.
One concern that will definitely arise when considering a move to independence is the responsibility of handling your own compliance. In a traditional firm, there are typically compliance teams and processes in place to ensure advisors are following all regulations and industry standards.
Integrated Financial Group’s support system is designed to empower advisors in navigating the complexities of regulatory compliance with ease. Advisors can offload the challenging aspects of compliance to our team to minimize risks and focus on their clients.
5. I don’t have time to handle the operational elements of running a business.
One of the biggest benefits of being an advisor at a traditional firm is the support and resources provided for operational tasks. However, with independence comes the added responsibility of managing these elements on your own. This includes keeping track of expenses, managing client accounts and paperwork, and staying up-to-date with technology and industry developments.
6. I’m afraid of the costs of transitioning and running my own practice.
Another significant concern advisors often face when considering the transition to independence is the fear of costs associated with starting and running their own practice. The financial implications can seem daunting, as advisors may worry about expenses such as office space, technology, marketing, and administrative support—all of which are vital for establishing a successful firm.
This anxiety is compounded by the uncertainty of generating consistent revenue during the early stages of independence. However, it’s important to realize that you may actually be leaving money on the table by not going independent. According to a study done by Fidelity, advisors that made the move to independence started earning an average of $100,000 more.
7. I’m not sure how to market myself as an independent advisor.
Marketing may seem daunting for those used to having a firm’s name and reputation behind them. However, as an independent advisor, you have the freedom to create your own personal brand and marketing strategy.
This can include developing a strong online presence through social media and creating informative content for potential clients. Additionally, networking events and speaking opportunities can help spread awareness about your services.
Here at IFG, we offer marketing support and enable you to connect with other successful advisors that can share their effective marketing strategies.
Go Independent with Integrated Financial Group
Choosing the right partner should be a well-informed decision, as crucial as the reasons that led to considering a transition in the first place. At IFG, we are committed to delivering unique and comprehensive solutions that align with your vision and aspirations.
If you’re ready to take the leap of faith and go independent, IFG can help.
Have you been on the fence about going independent?
IFG takes the fear out of the transition. Learn more about how our seamless transition process works.
Clearly, brains on top is what got you to where you are. Brains on tap is what can get you the rest of the way.
IFG is a holistic resource center that allows you to custom-tailor your vision of independence with a wide variety of á la carte menu selections to help exemplify what you do best and fill in the gaps where you might need some help. It’s the best of both worlds. You can have all the benefits of being associated with a national brand and top 25 financial advisory firm with your hands on the wheel steering your own future.
IFG gives you the freedom to leverage our specialized Infrastructure Support Teams…
Our dedicated Compliance Teams are here to free your time and money by helping your firm comply with rules and regulations without having to hire internal staff.
Our Marketing Teams can assist with the design, build and implementation of your digital platform and help deliver a winning on-line strategy.
IFG can even help with your transition including planning the move, turnkey technology setup and implementation and even office space solutions.
Once your set up and operating, IFG provides support solutions for human resources, group health and benefit planning and much more.
At IFG, we want you to be independent, but not alone. When you join our team, you’ll be part of a financial advisory business consortium of like-minded men and women that fight the same fights and share the same struggles that you do.
MasterMind Groups meet on a regular basis to share ideas and best practices. IFG’s national conference is highly regarded as one of the best financial advisor retreats in the industry. The IFG Brain Trust believes that sharing knowledge in a peer-to-peer setting is the best way to grow and prosper.
Your decision to go independent is not one to be made lightly. Knowing that you can have all the benefits of a big box firm and the flexibility to bring your vision into reality with all the tools and support necessary to ensure your ongoing success should help make this important choice a little easier.
Don’t take our word for it. Come see for yourself. We would be happy to have a private consultation, introduce you to IFG financial advisors and staff and let you feel for yourself what the Brain Trust is all about.
