Overcoming Fears of Going Independent

Why become independent? It’s a question many financial advisors at wire houses and regional broker-dealers think about. Those who have gone independent say it’s the best thing they’ve ever done with no more “suits” putting the pressure on to sell specific products and making sure your numbers are on target. Of course, there’s also the increased payout. Going independent offers the freedom to create and structure a business model that fits you and your clients, ultimately serving them with greater consistency and creating a better client experience.

Independent Financial Advisor

Overcoming Fears of Going Independent

According to research and consulting firm Cerulli Associates, the percentage of affluent and nearly affluent households investing with financial advisors grew from 50 percent in 2008 to 84 percent in 2012. This reflects the challenges presented by increasingly complex financial markets, as well as individuals’ desire for more personalized and effective investing strategies.

A number of larger broker-dealers create proprietary products, causing advisors to lose the ability to offer conflict-free advice. They are basically selling the products that are the most financially rewarding for the company – an inherent conflict of interest.

Many advisors have come to realize, for that matter alone, that setting up an independent practice can greatly enhance their ability to deliver truly customized, client-focused support, while offering the gratification, flexibility and rewards of a more entrepreneurial business model.

Leaving the big-business environment to go independent, however,  may not be for everyone. Those who have taken the leap, caution their peers to carefully consider what they are getting into – and to expect bumps along the way dealing with issues related to compliance, physical space, bill paying and staff management.

Another fear of many advisors is the drop in income. It’s natural to worry about the thought of walking away from a lucrative compensation package from a national firm in order to go independent. If you are looking for the maximum short-term gain, then going independent isn’t the right move. The added expenses of setting up the business will likely cause compensation to take a hit in the short term. To that end, it is crucial for advisers to manage expenses closely. It’s also helpful for advisors to speak with peers who have already gone the independent route, to get a clearer idea of how their compensation might change in both the short and long term.  According to research by Sanctuary Wealth Services, compensation tends to be higher in the independent advisory arena. One of the reasons assets at independent RIAs have grown is clients have realized the advantages of receiving personalized, responsive service, versus wirehouse business practices, which put their interests second.

Before you jump, however, it would behoove you to write a basic business plan. Figure out what type of practice you want to have and what type of advisor you want to be. Will you go exclusively fee-based or become a registered representative with a broker-dealer?

One of the biggest concerns associated with forming an independent practice is the fear that if you change your broker-dealer, your clients will leave you. Business has always been and will continue to be about relationships, not the letterhead on the monthly statement.

In the transition to independent status, many advisors fail to anticipate the level of training, support tools and technological structures they will need. New entrepreneurs are well advised to consider tapping an outside partner to help address gaps in knowledge or capabilities.

Summit Brokerage offers a platform which allows independent financial advisors to grow their practice the way they want to – by taking control of their careers and increasing their earnings at the same time. Offering the personal touch of a boutique broker-dealer coupled with the resources and services of the largest firms in the industry, Summit provides the support, services, products and leading-edge technology needed to build a successful business.

A big plus for advisors wanting to leave the confinement of the larger wire houses is that Summit is “product neutral”. Brokers are not pushed to sell any particular product. Equally important, Summit does not offer any proprietary products.

When choosing the right independent broker-dealer, you want to make sure any potential partner has a vast array of fee-based options. Summit offers a complete line of flexible fee-based programs, so you can deliver personalized portfolios which meet the needs of your clients. At Summit, you have the ability to conduct your fee-based business under your own individual RIA or Summit’s Corporate RIA.  You can also utilize platforms including: Separately Managed Accounts (SMA), Mutual Fund/ETF Wrap, Advisor Directed, Client Directed, Unified Managed Accounts (UMA), Third-Party Money Management and so much more.

Are you ready to step out on your own and enjoy the freedom and control of being independent, while at the same time benefiting from the best support structure in the business? If so, consider Summit Brokerage. To learn more or to join the Summit team, call 866.341.9285 to speak with a Business Development Associate.

For more information on Summit Brokerage Services, visit www.joinsummit.com or contact us at (800) 354-5528.

This blog and website are for informational, educational and discussion purposes only, and the owner of this blog makes no representations as to the accuracy or completeness of any information on this site or found by following any link on this site. Summit Brokerage Services, Inc., Summit Financial Group Inc., and any of their affiliated entities and principals are not a law firms or an accounting firms, or substitutes for an attorney or accountant. Although topics may be discussed on this blog that may involve legal, accounting, or investment issues, nothing on this blog shall be deemed to constitute the practice of law, legal advice, investment advice, and/or tax advice. Summit Brokerage Services, Inc., and its affiliates do not, and cannot provide any kind of advice, explanation, opinion, or recommendation about possible legal rights, remedies, defenses, options, selection of forms or strategies. The content on this blog is “as is” and carries no warranties. You should consult an experienced professional regarding tax consequences of specific transactions.

No reader should act in reliance on anything discussed in this blog without prior consultation with a licensed professional who is qualified to evaluate the reader’s individual facts and circumstances and offer an informed professional opinion with respect thereto. If any reader takes action or makes decisions based solely on the information on this blog without prior consultation with a qualified, licensed professional, the reader does so at his or her own risk and agrees that Summit shall have no liability resulting from such unilateral action or decisions by the reader.

Summit makes every effort to provide accurate and truthful information in its posts on this blog, but in no way expressly or impliedly warrants or guarantees the accuracy of its postings and/or the information posted here by others. All information is believed to be from reliable sources, however we make no representation as to its completeness or accuracy.

Summit may, on occasion, post links to information maintained on other websites. Such links and the information thereon are not under Summit’s control.  The mere appearance of a link to a third party site does not mean that Summit has undertaken a review or approval of the link and/or its contents.  Readers must treat information from third party links at the reader’s own risk, and Summit accepts no liability with respect to such third party information. Please note that the third party’s privacy policy and security practices may differ from Summit Brokerage Services, Inc., Summit Financial Group, Inc. and its subsidiaries’ standards. We assume no responsibility for nor do we control, endorse or guarantee any aspect of your use of the linked site.

Stay Connected

Subscribe to Summit Brokerage

Personalized Industry Newsfeed For You

Thank you. You are now subscribed.


Thank you. We will get in touch with you shortly.