Financial advisors increasingly want to work for themselves.
Over 2015-2020, according to Fidelity Investments, nearly one in five advisors ditched their employer for a competitor, often one much smaller. Among those who bailed, nearly 40% joined a registered independent advisory (RIA) firm, either a pure one or a hybrid shop with broker-dealer services. One in four went to an independent broker-dealer. An additional 18% of all advisors considered making similar moves. “No one is staying in their lane,” wrote Bernie Clark, the head of Schwab Advisor Services, last February.
Whether the jump is to an independent shop — where advisors are held to a fiduciary standard, the wealth management industry’s highest threshold of responsibility to clients — or to a hybrid RIA with broker-dealer services, independence from big asset management companies and Wall Street brings a laundry list of things to do.
One thing often missing in that list: an actual game plan. Fewer than half of advisors who hopped possessed what Fidelity called a formal transition plan. While winging it is rarely a strategy for success, even those with a plan are daunted by the amount of paperwork involved, the time (an average 10 months, Fidelity says) needed to complete a transition and troubles with transferring clients’ investments.
There’s an avalanche of advice and marketing from consultants, “aggregators” (firms that bundle RIAs together) and add-water-and-mix “platforms” that sell technology and operations consulting services. (Think XY Planning Network’s 84 steps to launch a firm or Fidelity’s meta-look at the “five stages” of moving.)
Then there’s uncut advice from those who’ve been there. Here are rookie tips that you won’t read elsewhere: