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Top Tips for Deciding Whether to Go Independent as a Financial Advisor

Meg Hanington October 27, 2022

Female financial advisor contemplating independence

The pandemic led many to rethink where, how, and why they work—including financial professionals. If you’re among them and thinking about making a change by becoming an independent financial advisor, here’s what you should consider before taking that leap.

The Motivation to Go Independent

Advisors have been changing firms and models frequently in recent years, with the independent channel experiencing a 5.2 percent headcount increase in the past decade. A recent study found that 38 percent of advisor-managed assets are with independent advisors, up 6 percent from 10 years ago.1

This desire for change is not going unnoticed by the industry, with large firms getting more and more creative with the programs and packages they introduce to attract and retain top advisors.

When thinking about the freedom that can come with independence, there is a lot to consider. Flexibility is primary: The ability to offer products and services that are best for your clients, to hire whomever you want, to make your own schedule and work wherever you want, and to pay yourself as you see fit.

Independence also gives you the license to exercise your entrepreneurial spirit—something I can relate to as someone who has chosen that path. The desire for business ownership plays a big part in the decision-making process.

Designing Your Best Workday

When you think about your day and the work you want to do, what does that look like? Taking some time to imagine and make note of the work that energizes you can help paint a picture of how you want to work. Going independent means you’ll get to play a greater role in the details of your daily work life.

To shed some light on what it means to be independent, think about it in terms of freedom versus support. If you still want someone else to make the decisions about your tech stack and its maintenance, compliance, marketing, and human resources, going fully independent may not be right for you. But if you’re energized by the thought of owning those decisions, independence could be the right choice.

Creating a Unique Experience for Your Ideal Client

A key reason many advisors choose to strike out on their own is the desire to work for a specific type of client. You may have found yourself feeling frustrated because of the client minimums required by your existing firm. Choosing independence gives you a chance to establish your ideal client.

Beyond determining who that ideal client is, you also have the opportunity to ensure you establish a practice that exceeds that client’s expectations. Do some soul-searching by putting yourself in the client’s shoes to determine how you want the relationship to look and feel. A client-centric mindset will ensure you design a customer experience that mirrors how you would prefer to be treated.

Steps to Achieving Success

The decision to go independent is not one to be taken lightly. If you have decided to move forward, consider these additional factors.

Firm Values

Your firm values may be the very essence of why you are considering independence. Perhaps there is a niche customer base you want to serve. Or maybe it’s because of the types of services you want to offer.

Determining your firm values will establish the framework upon which you will build your practice. From the long-term strategic planning to the day-to-day activities that you and your team are responsible for, these values will dictate the behaviors and processes of your team, which represent your brand and culture.

The strength of your values is critical as it dictates what you must put in place to achieve an optimal client experience. Establishing these values is fundamental to the decision to seek independence.

Brand

When you have established your firm’s values, they become the building blocks for your brand, which is a crucial part of differentiating yourself. It doesn’t matter where you are geographically—there could potentially be hundreds of other firms with whom you will compete for clients.

Using your firm values as a starting point, think about how they will resonate with your ideal client base and create a brand that communicates specifically to that audience and presents an accurate representation of what your firm stands for.

Strategic Plan

Designing your ideal business with intention is important for any financial advisor. Creating a strategic plan will give you a course to define success. What are the short- and long-term goals you want to achieve? What measures will you use to determine if those goals are met?

These should include growth goals, adding new team members, and expanding technology—anything that allows you to create more engaging client experiences and support your team. And just as a financial plan is constantly adapting and changing, so too should your strategic plan. Revisit it frequently to make sure you are on target and determine if changes are necessary.

Authenticity

Finding a means to be your authentic self may be a key driver in your decision to seek independence as an advisor. Speaking from a place of authenticity will not only allow you to enjoy your work more, but it will also help you build strong relationships with your clients. When your authenticity shines through, clients will connect with you on a much deeper level. Sharing your human side will benefit everyone.

Network

One piece of the independence puzzle that is often overlooked is establishing your centers of influence. It is critical to cultivate and maintain effective partnerships for the benefit of your clients and your practice. These partnerships add value to your relationships as an extension of your offerings and capabilities. They offer an opportunity to share ideas, information, strategies, and reciprocal referrals.

Establish partnerships that support the life cycle of your clients and their major life events. Keep in mind that these may be professionals you already work with, or they could come to you via an existing client relationship. For example, you’ll likely have clients who already have their own CPA. Make sure you know that professional’s process and align yourself with it.

Don’t Rush the Process

It’s important that you take your time as you are making this decision. There is a lot to think about! Don’t be surprised if the research and planning take a year or more.

There are many advisors who are not inclined to go it alone. They may not want to be troubled by the business management elements of hiring, paying rent, or choosing technology and office space. It’s enough for them to focus on helping their clients and they are willing to pay a fee for the support infrastructure that enables them to do that.

Owning your own business has its rewards, but you have to have the resilience to, in essence, have two or even three jobs. If you’re going to have a team, you’ll be a financial advisor, a business owner, and a leader. Every entrepreneur has had sleepless nights thinking about the added responsibility they shoulder. But many find the stress is well worth the freedom of doing things their own way.

DISCLAIMER: The eMoney Advisor Blog is meant as an educational and informative resource for financial professionals and individuals alike. It is not meant to be, and should not be taken as financial, legal, tax or other professional advice. Those seeking professional advice may do so by consulting with a professional advisor. eMoney Advisor will not be liable for any actions you may take based on the content of this blog.

The views and opinions expressed by this blog post guest are solely those of the guest and do not necessarily reflect the opinions of eMoney Advisor, LLC. eMoney Advisor is not responsible for the content, views or opinions presented by our guest, nor may eMoney Advisor be held liable for any actions taken by you based on the content, views or opinions of the guest.

Source:

1 “Advisor Transition Report, An Update on Advisor Movement in the Wealth Management Industry: H1 2022.” Diamond Consultants, 2022 https://www.diamond-consultants.com/tools-and-resources/advisor-transition-report/.

About the Author

Meg Hanington, EPC, co-founder of Beacon Partners and co-host of the business streaming TV show, GetReal!, began her career at Merrill Lynch where she honed her skills in critical thinking, technology, marketing, and business development. Subsequent to this experience, she spent several years supporting successful independent financial advisors as they strengthened and grew their businesses before ultimately co-founding Beacon Partners where she knew she could achieve more independence, autonomy, flexibility, financial stability, and choice to serve her ideal clients. Meg delights in helping her advisor clients become re-energized, excited, and motivated. Her guidance helps them to refocus on why they became an advisor in the first place.

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Tips specific to the eMoney platform can be found in
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