The Top Three Concerns with going Independent

Two-thirds of all financial advisors who moved in the last five years left employee models for the independent space, according to the Advisor Movement Study. This trend will continue as more advisors see the benefits of the independent model.

Each week, I come across advisors who are nervous and scared to make the jump to independence. It’s understandable to be concerned with change. I would like to address the top three concerns I hear from financial advisors.

1.?????“I don’t want to run a business.”

This is probably the most common concern I hear from #financialadvisors considering going independent. This is a valid concern. Many Broker-Dealers (BDs) and Registered Investment Advisors (RIAs) offer the opportunity for financial advisors to go fully independent, with very little to no help or support. In this model, you are on an island, on your own. Advisors who choose this path must understand that they will have to run a business and a practice at the same time. This is a daunting task even for the most experienced financial professional.

A great alternative for financial advisors who are looking to go independent is to partner with a group, like an Office of Supervisory Jurisdiction (OSJ). OSJs vary in the support that they provide advisors. Some Super OSJs provide complete turn-key support for their financial advisor partners. This includes all administrative support, paperwork generation, compliance, marketing support, and in-house investment management. In doing this, these OSJs take all of the operational tasks of running a business off the advisor’s plate. The fee to partner with such groups is reasonable, typically ranging from 5%-20% of an advisor’s production.

2.?????“I am scared of a transition and all of the work involved in repapering.”

Transitions are never easy and they require a lot of planning and efficient execution. Financial advisors who are not willing to put in the time and preparation should not go independent. Repapering is actually the easy part of a transition. The hard part is all of the work and preparation that needs to happen before you make a change.

Many #BDs and #RIAs claim to have a stellar transition team, but in reality, they leave the majority of the heavy lifting to the transitioning financial advisor. One of the most important things to consider when reviewing a firm is their transition support. A successful first 60-90 days will launch your independent career. An unsuccessful first 60-90 days can ruin it.

The most important questions you should ask any organization that you’re considering joining are: Do you have a dedicated transition team to help me complete all required paperwork to transition my clients? How long will this transition team work with me? Is the transition team internal or an external third party? Do you provide marketing material to promote my transition? ?

3.?????“Right now, everything is done for me. If I go Independent, I have to do more.”

One of the few benefits to the employee model is that everything is done for you. However, that convenience comes with a price. They take a huge slice of the pie to cover the cost of the support they provide. Often over 50% of your revenue, and sometimes as high as 75%.?The questions are: Is the support they provide worth the amount they take? Can you join a group in the independent space that provides the same support at a lower cost?

Some great #OSJ partners provide all of the administrative support to the advisor for a much lower cost. If you find the right OSJ partner, you can offload all of the low-revenue generating activities to staff and spend your time on high-revenue generating activities. The idea that you have to waste time on administrative activities in the independent space is false.?That is, if you partner with the right OSJ.

Going #Independent is not the right move for every #advisor . The decision to go independent should be well thought out and planned. The most important thing is to find the right partner to go independent with. The right OSJ can make all the difference. ?

Securities and investment advisory services offered through NEXT Financial Group, Inc. Member FINRA/SIPC. Sierra Ridge Wealth Management is not an affiliate of NEXT Financial Group, Inc.?