Ever since the financial crisis, advisors leaving a wirehouse firm for a Registered Investment Advisor is likely a story you’ve heard again and again. Chances are, if you are a financial advisor, you know someone personally who has made the leap. Before breaking away, though, make sure you iron out the answers to the following 10 questions. These answers will quiet the noise and clarify your decision.
Do they sell investment performance or do they sell financial planning? What does their culture look like—both internally and client-facing? Do they embrace technology or dig their heels in, resisting change?
Do you buy into that mission? Are their marketing materials consistent, and can you imagine yourself authentically delivering that pitch? Is your and the RIA’s vision for the future aligned?
Is the firm looking to sell? Are they healthy in terms of cash flow and profitability? What are the goals of leadership in the coming 12 months? Have you spoken to an advisor similar to you who recently joined?
If the firm is looking to eventually sell, how far off is that? If they are not looking to sell, what is the firm’s ultimate succession plan?
Does the firm incorporate technology into its vision of the future? What software does their current tech stack include, and what does their technology strategy look like going forward?
Look into the compensation package at the RIA. It’s undoubtedly different than at the wirehouse, so figure out if it will work for you. What are your incentives and/or benchmarks? How much in client assets do you think you’ll reasonably bring over from the wirehouse? Do you feel as though you’d be fairly compensated for the work that you’d be doing? What other benefits does joining an RIA bring to the table that you don’t have at the wirehouse?
What is the RIA’s fee schedule, and how is it determined? Is this in line with how you’re currently charging clients, and/or is this something that’s clear enough to discuss with clients? Does the firm offer any flexibility on pricing? Do they charge based on AUM or are their fees fixed?
Many advisors break away from wirehouses because of ownership issues. At the RIA, will you own your book of business? Can you leave whenever you want? Who are the key executives at the RIA who would be involved in your business, and who are the operational players and support staff that could/would help you with back-office support?
Do you currently have support staff working with you? A receptionist, other advisors, etc.? If so, would you like to bring them with you from the wirehouse to the RIA? Would there be an opportunity to bring your team into the fold at the RIA? How would you communicate your move with them?
Let these questions—and their corresponding answers—guide your decision to break away from your wirehouse firm and join an RIA. There are obviously numerous factors to consider, but these should provide you with a good foundation on which to base your decision. The most telling question is often: How much do you value your independence?
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