Think Like a Business Owner: Five Best Practices to Find Success as an Independent Financial Advisor

Think Like a Business Owner: Five Best Practices to Find Success as an Independent Financial Advisor


Independent Financial Advisor

By: Abby Salameh, Chief Marketing Officer
Published October 11, 2017

There are a lot of intangibles when you’re a business owner, and being an independent financial advisor means you are a business owner. Owning a business can be a daunting task, especially if you are coming from a full-service firm where you were accustomed to having things taken care of for you. Figuring out which copier and printer to buy for the office, what type of coffee machine to have in the semi-kitchen or which phone system to use are unlikely problems to be on the mind of a wirehouse advisor. As a business owner, you must make these kinds of decisions, and some decisions will have significant impact: selecting an office space, setting up payroll or hiring a receptionist or an admin. The list goes on and on. When you are an employee at a full-service broker-dealer, all of these “business activities” are handled for you. You simply show up and turn on the lights. But now that you’re a business owner, you have to start thinking like one.

While this might sound scary and a bit overwhelming to consider, most wirehouse advisors who take the leap of faith to the independent advisor world could not be happier. In fact, many of them wish they had done it sooner. Take Joe Barbara and Frank Euvino as an example. A few years ago, Joe and Frank came to Private Advisor Group from a wirehouse firm to start an independent practice, making what Frank calls “the biggest decision of our lives.” They were extremely nervous, but also tremendously excited. Joe and Frank will tell you that the secret to their success was conducting due diligence on where they wanted to land, ultimately partnering with PAG.

In working with many advisors over the years, I have observed some practices that empower independent advisors and their staff to succeed. By following these best practices, Frank and Joe were able to celebrate their accomplishment. I discuss a few of them below.

Create a Company Employee Handbook

While this may seem mundane and like a waste of time, creating a company employee handbook is critical to the long-term success of a business. Documenting how you envision the company running, what the vacation policy looks like, how employees can expect to be treated and what values are reflected in the corporate culture are top priorities. In the absence of a document like this, employees will take it upon themselves to create their own policies and culture. You want to showcase a unified front, both internally and externally. This can’t be done if everyone is on a different page.

Document Processes

Take the time upfront to identify and document workflows for repetitive processes like on-boarding a new client, automated distributions and new account openings. Taking the time to put proverbial pen to paper and outline these processes allows you to create workflows in your CRM system and assign tasks to different employees, ensuring that processes are automated and completed efficiently and accurately. Documenting processes will also maintain consistency in your approach to working with clients and provide an internal framework where everyone understands his or her role.

Articulate Your Value Proposition

There is nothing more important when opening a business than knowing who the firm will serve, what solutions it will provide and how it will define and leverage a unique advantage. There are many places that provide exercises on how to create a clear and concise value proposition. For instance, firms like Vanguard have built value proposition tools you can use online for free to help you in your efforts. Once you have created your value proposition, it is crucial to make sure that all employees understand it and can articulate it themselves.

Create a Business Plan

It is hard to get where you want to go if you don’t know where you are going. In other words, take the time to determine where you want to be in five years, and then document how you will get there. Including key employees in the brainstorming sessions can help you hold individuals accountable for how they will assist you in achieving the firm’s goals. Break it down into metrics: identify each person’s responsibilities, document the exact activities that must be executed to achieve those responsibilities and track the results regularly. The most successful advisors know exactly what their end game is and have built a plan to reach that destination.

Be Realistic

As a business owner, it is important that you look in the mirror and be realistic about the business you wish to create. If your idea of starting your own practice is to run a “lifestyle” business and play more golf, don’t fool yourself into thinking it will grow. It is important to be introspective and align your own personal objectives with your business objectives. Look to important partners for assistance. As Frank said, this could be the biggest decision of your life. Treat it as such. Had Joe and Frank not leaned on PAG for assistance, their transition to independence might not have been as seamless.

In closing, independent advisors must start thinking of themselves as true business owners and creating infrastructure that can support the business. Take the time, do your homework and learn from others who have already created successful businesses. It will be worth the effort.