While being dissatisfied with your current employment as a financial advisor may lead to thinking about becoming independent, it is only a start toward picking the type or model of independence that is right for the individual advisor. There are several key considerations to weigh when making this decision.
Considerations Regarding Independence
There are several key considerations to weigh when making this decision. Start by defining the personal key considerations that need to be addressed in any future decision on going independent.
The first issue to address is with the person in the mirror. Are you, as a financial advisor, really so unsatisfied with your current situation that you will take the leap to independent financial advisor? Consider your situation thoughtfully. Are you really ready, or has it just been a bad or challenging week or month that has created your dissatisfaction?
When periods of dissatisfaction repeat over time, there is greater chance that the issues you dislike are chronic versus just a bad stretch. Or the call to be an entrepreneur beckons. For some advisors this realization is simply a manifestation of a long-standing knowledge that at some point in the future, they are going to become an independent advisory. And finally, current issues have just pushed that desire to the forefront.
Assuming you have passed the mirror test, now what?
Independence: Start By Defining Your Path To Retirement
The first step to independence is looking to the future. Define your path to retirement. This may seem odd for younger advisors to consider, but it is key for planning anything down the road. Ask yourself the following questions to define what you want your retirement to look like:
- How many years are left in your career as an advisor? The answer does not need to be specific, just a general idea.
- What does life look like in retirement?
- What financial resources will you need?
- What financial resources are wants (vs needs)?
- Is there a lump sum on hand and/or is it a future earnings stream/or both?
- What do you want for your clients upon retirement?
The answers to these questions will play a role in what type of independent advisory solution is the best for you as a financial advisor. Both monetary and non-monetary factors are important to consider. The advisor that decides to go independent should focus on the platform providers that strive to create the most freedom and flexibility for the operations of a practice.
Operations and Operations Support Considerations
When considering becoming an independent financial advisor, selecting an operations partner is critical. Platforms have varying levels of support built into their systems that advisors need to quantify to meet their needs. Take these areas of administration into consideration when evaluating:
- Solving problems with client accounts
- Assistance on the use and implementation of financial software, and dedicated support
- Access to enterprise-level software, tools and platforms
- Custodial services
- Billing and reporting software
- Fulfilling client and trading documentation requirements
- Compliance requirements
- Due diligence
The cost of time revolves around the nature of any new business, and while a newly independent financial services advisor will experience some freedom in how they handle responsibilities, many of these tasks can be non-revenue generating tasks. Outsourcing non-revenue tasks becomes advantageous as your firm evolves to build growth and keep you on-task with revenue-generating opportunities.
Independence: The Choice is Yours
The choice to go independent is a natural progression of an advisor’s career. We strongly emphasize, for an advisor seeking independence, to perform a complete and sincere effort in due diligence to fully understand their motivations, goals and choices for an independent financial services advisory. Persevere in your research and in the process of deciding, and reap the full rewards of having your own independent firm – with full financial benefits, quality of work life and peace of mind that you desire.