Top Three Things Financial Advisors Can Do to Prepare for Going Independent

Top Three Things Financial Advisors Can Do to Prepare for Going Independent


Advisors Going Independent

By: Charlie Latimer, Director of National Recruiting
Published February 8, 2017

Financial advisors choose to go independent for several important reasons: First, the economics of going independent are far superior to all other channels. In addition, independent financial advisors own 100% of the equity in their practices. And most importantly, by serving as true fiduciaries, advisors of the independent model are able to provide clients with the highest standard of care available in the industry. If you are currently considering going independent, here are the top three things you can do now to prepare for this important career transition and move closer to realizing your dream.

Familiarize Yourself with Client Data Rules

You’ve been working with your clients for years, and some of them have become close family friends. However, when you leave Firm A to go to Firm B, it’s critical to understand the precise rules you need to follow as they relate to client data. That is, who actually owns the data? What is Firm A’s privacy policy? How does your employment agreement with Firm A outline the treatment of client data?

The only way you can leave with 100% of your client data is if you are already independent or if your firm allows you to take everything with you (which is extremely rare). Otherwise, if you are at a wirehouse or some other “semi-captive” broker-dealer – Ameriprise comes to mind – you have to follow the “Broker Protocol” to the letter. Choosing to not follow, or loosely follow, the Protocol will surely result in Firm A seeking a temporary restraining order (TRO), lawsuit or other legal remedies available to stop you in your tracks.

The bottom line: the first phone call you should make when seeking independence is to consult a securities attorney. That conversation should not take more than an hour, and the Protocol itself is pretty basic. You also want to make sure that Firm B has proficiency in managing independent advisor transitions.

Plan Out Your Transition and Execute It Step by Step

The next step in going independent is to plan your transition process. Start by picking a date (“D-Day”). From there, draw up a transition plan that begins four to six weeks out from your chosen independence day, and execute your plan incrementally in coordination with Firm B’s transition staff. If you stay on course and meet your self-imposed deadlines, your anxieties will give way to excitement in short order! Surprises are eliminated with planning and experience. Make sure you cover the weeds with Firm B early on to minimize client disruption and set proper expectations.

Forget Your Anxiety

“Will my clients follow me?” Dwelling on this question is a great way to induce anxiety, undermine your confidence and slow down momentum and progress. Truthfully, I have yet to see an advisor’s practice fall apart in the middle of a transition due to clients staying put. Your clients are your clients, and the vast majority of them will follow you, especially if they know what’s in it for them: conflict-free fiduciary-level services, lower costs, open architecture access to investment solutions, no proprietary products and transparent fees. Who wouldn’t want to work with the new and improved you!? Forget your anxiety, get motivated and get organized.

In closing – and forgive my bluntness in advance – you aren’t blazing a new trail by going independent. It may feel like that, but thousands of financial advisors have gone before you, and thousands more will follow. Every mistake, oversight and surprise has already been experienced. If the independent model wasn’t a successful path, you wouldn’t even know about it to begin with. Think of it this way: You’re doing the best thing for your clients and, incidentally, will be making a lot more money. It’s a win-win!

View our special report on Dispelling Myths and Fears of Going Independent