New Recruiting Headlines Highlight “Glide Path” To Advisor Independence

By Ryan N. Shanks, CEO, FINETOOTH CONSULTING on Friday, January 6th, 2012

Fresh news from some of the biggest brokerage networks around is posing a subtle but real challenge to a lot of advisors’ assumptions about how their careers should progress.

I’m not going to name names, because the identity of these firms doesn’t really matter. What matters is that brokerage firm ABC just reported spectacular recruiting numbers -- up over 30% above last year -- and its rivals at firm XYZ kept pace by pulling around $500 million in client assets from the wirehouses.

These advisors in play for a lot of the reasons that have always motivated talented people to make a big career move. They want to be treated better and to have more latitude to do the right thing for their clients.

Most of all, they’re tired of being forced to conform to directives from a corporporate parent, filtered through enless layers of management. They want fewer restrictions on their investment universe, fewer requirements to sell one product over another, less internal politics to eat up precious productive time.

They want more independence.

But here’s the thing. Neither of the firms I just mentioned is an independent registered advisor, and neither is even really known as an independent broker-dealer in the normal sense of the word.  They’re more or less traditional brokerage operations.

A lot of their advisors are full employees working for a paycheck. At best, you might own your own franchise, but it’s always going to be the company’s name on the door.

But there’s a lot of room to play with between being a free operator and being a captive producer.

The fact that firms like these are scoring big wins tells us that independence is rarely going to be an all-or-nothing thing that takes everyone straight from the wirehouse to the independent RIA world. While I do see my share of one-advisor revolutions, for most of us, it’s more a matter of evolutionary transitions and gradual progress.

Not every step needs to be a giant leap

If it’s not your name on the door, you have little to lose in investigating your options. Most clients are surprisingly loyal to their advisor, not to the firm. And if they weren’t loyal to you, they were probably gearing up to make a move of their own anyway.

Once you’re thinking like a free agent, you can keep steering your own career instead of drifting with the tide. Here’s an interesting statistic: at one of those firms I mentioned up above, a full 10% of their advisors jumped ship last year. And that was a good year.

These are companies that are pulling talent out of the wirehouses at a spectacular rate, but that talent is not willing to stop there. Once they get a taste of relative freedom, they want more.

Sooner or later, they’ll take their career as far as it goes -- starting their own firm or selling their practice -- and either way, they’ll be their own boss.

But in the meantime, they’re building their muscles and their books to support the next move.

That’s what we talk about around here. 

Ryan is the Founder and CEO of Finetooth Consulting, a national boutique firm providing business advice to Advisors and the firms they partner with. He started the firm in November 2006 as he recognized a need for advisors to have someone represent their interests in the market, much like the representation of an athlete by a sports agent. Ryan is also the Co-founder of Join A Firm, an online recruiting service that helps financial advisors and firms connect, allowing advisors a turnkey transition to independence by joining existing firms.ate parent, filtered through endless layers of management. They want fewer restrictions on their investment universe, fewer requirements to sell one product over another, less internal politics to eat up precious productive time. 

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