I want to be INDEPENDENT! Why Advisors Will Continue To Move Away From Wirehouse Firms
On a weekly basis, media coverage of the financial services industry is dominated by news of multi-million dollar, if not billion dollar, advisors and teams choosing to transition away from wirehouse firms and make the move to independence. By way of example, just this week alone according to published media reports in AdvisorHub, Rockefeller Capital Management and RBC Wealth Management recruited advisor teams who collectively managed $1.2 billion in client assets away from Merrill Lynch and UBS respectively.
The trend toward independence isn’t a recent one. It has been years in the making as the numbers of advisors making the leap to independence continue to climb, showing consistent year over year growth. As we move into the 2021 year, this trend towards independence shows no signs of ceasing. In fact, it can be surmised that there will be explosive growth in the year ahead when it comes to more advisors deciding to make the independent move, driven by three key factors:
Been There Done That – The COVID-19 crisis and associated work from home requirements have given advisors the opportunity to ‘go-it-alone’ so to speak and get a taste of what independence is like. Many wirehouse advisors, particularly veterans in the wirehouse space, have been apprehensive as to what independence would be like and whether their personal skill sets would play to the requirements of running an independent practice. Work from home measures have wiped those doubts away. Throughout the financial services industry, most advisors have been working in a de facto independent environment for almost a year now and have gained a solid sense as to whether they enjoy and can be successful working in an independent environment.
Absence makes the heart grow fonder – or maybe not? – Wirehouses have never been the gold standard when it comes to advisory support. Driven by the almighty dollar and legacy C-Suite thinking, many wirehouses still view their advisors – and the support systems which those advisors rely on to complete their work successfully – as expenses not investments. The last year and time working from home and away from the office has only proven to draw more attention to those deficiencies in advisor support common at most wirehouse firms and has made the option of moving to independence even more attractive to most advisors.
Leaving money on the table – It simply comes down to basic numbers that successful advisors can realize a higher income by going independent. Wirehouse advisors are trapped in a constant loop of having to put in more effort to achieve the same personal financial result while simultaneously managing to an evolving set of AUM, sales, and productivity goals set at the prerogative of the executive level of the wirehouse itself. For the independent advisor, it is their own ambition, hard work, and professional and personal goals which drive their income forward, which often leads to greater personal satisfaction and achievement in relation to the results accomplished.
Choosing to go independent isn’t a decision an advisor should take lightly. Yes, there are many advantages to making the move and the grass will certainly seem greener on the independent side for many advisors. However, if you are an advisor considering the independent option, give yourself the mental space to really analyze what is driving your decision to go independent. Find a trust-worthy and experienced recruiting firm to consult with in order to understand the pros and cons of the opportunities available to you. Then, armed with insight for what a transition to independence means for you, and the best strategies to realize that vision, move forward with confidence. After all, a synonym for independence is freedom – and doesn’t that sound nice?