Change is always scary - at least at
first. For financial advisors, leaving the safety of the large firms housed in
the towering skyscrapers of Wall Street and starting their own consultancy may
sound like an overly ambitious and herculean thing to think about. However,
many have done it before and there's no reason for you to not accomplish the
same feat. While it's not a walk in the park, it's feasible and can be highly
rewarding.
The success stories involving
breakaway brokers are varied and there's not one single formula for success.
However, financial services recruiters would agree that there are certain
tried-and-tested tips, a blueprint or roadmap that brokers can use as a guide
en route to independence.
Never Doubt Your Reason for Leaving
Your Current Firm
One of the things you need to do is
to pinpoint your reason why you want to leave your present wirehouse or
brokerage and establish your own advisory practice. The key is to never second
guess the reason behind your decision. Many times, consultants decide to leave
the nest of their advisory firms and when things go awry, they feel devastated
and regret their decision altogether. If and when you decide to be an
independent advisor, be 100% resolved on your choice and never question your
reason for leaving.
According to the findings of the
research group Aite, the most successful independent consultants left their
work because of discontent. More than half said they "broke away"
because they want to have the control to choose the crème de la crème third
party products and 42% said they want more freedom on how to advise their
clients. You can tap the expertise of financial advisor recruiters to help you
with money matters with your transition from an in-house consultant to running
your own practice.
Financial Considerations
According to surveys, the startup
cost for an independent brokerage practice is somewhere between $50,000 and
$100,000. The final amount will depend on a number of things such as office
space, technology and infrastructure, staffing and branding materials. However,
you should not see this as an irrecoverable expense, but rather a capital expenditure.
You should also consider how much
revenue you're going to bring in - short-term, mid-term and long-term.
According to the Aite Group research mentioned in the previous section, most
breakaway brokers retain more than 75% of their clients. This is your
short-term income. You also have to decide on a business model - usually a
choice between fee-based or commission-based. The good thing is, you don't
necessarily have to choose one over the other. A number of independent advisors
employ a hybrid business model wherein they dually perform the roles of a
standalone consultant earning a retainer fee and as a representative of an
independent brokerage firm earning a commission.
Lifestyle Implications
Lastly, being an independent
financial advisor has its implication on your lifestyle. Actually, it's more on
your personal business ethic. As an independent financial consultant, the way
you run your practice is 100% up to you. This involves constantly updating your
business practices based on new regulations and policies. Likewise, adhering to
impartial fiduciary standards is a non-negotiable.
You think you have what it takes to
be an independent investment advisor? Professional financial services recruiters can help you create a plan for a seamless career
transition. The financial advisor recruiters at Willis Consulting have a proven
track record of helping in-house investment consultants establish an
independent advisory business with customized solutions based on their clients'
individual needs.
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