Becoming an Independent Financial Advisor

As a financial professional, you’ve built a career helping clients pursue their dreams and plan for their future. Now it’s your turn. Imagine having the freedom and flexibility to build your perfect business—serving your clients your way, determining the level of support you want, and keeping more of what you make. Will your current path lead you where you want to go, or could a move to the independent model be the key to unlocking the future you envision?

Exploring the Paths to Independence

An overwhelming majority of advisors, 71%, say they prefer the independent model, but only 44% are currently independent.² What’s holding them back? For some, it may be a misconception that independence is an all-or-nothing endeavor instead of a spectrum of flexible options. They’re asking questions like: Will I be on my own, or will I still have access to some back-office support? Will I have to manage the startup and ongoing daily operations of running my business? Will I be responsible for making all the decisions?

For others, it may be fear of the unknown. Will my clients come with me if I leave a big name firm? Will I be able to generate enough revenue to thrive? Will the transition be too much of a hassle and too time-consuming? 

The good news is, there are solutions to each of these questions, which we thoroughly discuss in The Essential Guide to Independence. 

Here, we debunk some of the common myths about the independent model. 

Myth or Reality?

Myth 1: I will have to start from scratch. 

Reality: Some firms offer a breakaway solution that combines the freedom and flexibility of entrepreneurship with hands-on business services and support. 

“If only we had known sooner how functional things could be away from the wirehouse. There was a lot of uncertainty around if we were going to be completely on our own, what happens if equipment breaks down or we run out of supplies, how is it going to get billed—all of that was uncertain. After a few months, we got a lot of things on autopilot and started moving into the business as usual part of things. It keeps getting better and easier to function.” – Steve Arcos, Chief Operating Officer and Co-Founder, Tower 68 Financial Advisors 

If you’re looking for an independent wealth management firm that provides a blend of freedom and support, consider adding these questions to your due diligence checklist: 

• Do you have a breakaway solution?
• Would I own my client relationships?
• What services and support are included?
• What is the cost?

Myth 2: I won’t have a steady paycheck or the employee benefits I’m used to. 

Reality: Some firms offer a W2 model, allowing you to focus on your clients and earn a guaranteed salary with access to employee benefits without having to manage the responsibilities that come with running a business. 

“We get the feel of independence. We own our own business. But we have the support of everyone in the background making it happen. We’re independent advisors who have healthcare and a 401(k).” – Tracy Applewhite, Senior Vice President, Financial Advisor, Applewhite Tyll Retirement Planners

If you want to continue operating as a branch employee but with better economics and more control over your business, consider adding these questions to your due diligence checklist:

• Do you offer a W2 model?
• Would I own my client relationships?
• What would my payout be?
• Would I be able to monetize my book in the future?
• Would I have control over my brand, clientele, and product offerings?

Myth 3: Running a business will be too time-consuming and I won’t have enough time to focus on my clients.

Reality: Being independent doesn’t have to mean being on your own. Most wealth management firms offer varying degrees of support for the day-today tasks of running a business. Outsourcing these items to a trusted partner frees you up to engage clients and prospects and build lasting relationships. 

“I think the perception that most advisors have is that when you become independent, you pick up all these new things you have to do to run your business. Although I didn’t have the same flexibility at the wirehouse I was at previously, I tried to ignore it largely because it was very easy to run my business and I didn’t want to go through the hassle of having to move my practice. But LPL’s Strategic Wealth Services platform makes it very simple. I don’t have all those things to worry about on a regular basis.” – Mike Ashworth, CFP®, Ashworth Financial Group, Managing Director.

If you want to free up your time to focus on your clients, consider adding these due diligence questions to your checklist: 

• What business consulting and outsourcing solutions do you offer?
• What’s the price?
• Do I qualify to take advantage of these services, or are they tied to production minimums?

As you can see, the independent model has evolved significantly in recent years, and many wealth management firms have expanded their offerings to keep pace with advisors’ and investors’ needs and expectations. Make sure you align with a wealth management firm that’s continually evolving along with—and even ahead of—the curve to ensure you have the tools and support you need to thrive. 

Finding Your Path

Does a path to independence mean breaking away from the wirehouse environment but maintaining support like office space, benefits, and technology? Does it mean running your business with the full support of a team that’ll take care of the day-to-day for you? Or does it mean taking on 100% of the accountability, including compliance, risk management, and fiduciary responsibilities? 

While the final decision of how you build your business is up to you, take time with your due diligence and explore several affiliation models at multiple firms before you narrow down your choices. Remember to be thorough and thoughtful about how the broker-dealers, wealth management firms, or RIA custodians you’re considering will support your journey and business growth from day one. 

Before you start talking with a firm, get to the heart of your why. The following questions can help you determine a clearer picture of what you want from a potential move to independence, and lay out your priorities for an independent firm and business model. 

• Why are you considering a move? What will it mean for you?
• What drew you to your current firm? What’s changed?
• What does independence mean to you?

Your Options at LPL Financial

With LPL, there is no one-size-fits-all or -size-fits-forever model. No matter what independence looks like for you, we have a solution to help you pursue your goals now and in the future.

• Employee model: Linsco by LPL Financial is a modern W2 solution that embraces the spirit of independence without all the responsibilities that come from running a business.
• Join an existing office: If you want to explore independence but aren’t ready to take on full business ownership, we can help you find an existing office or advisor network where you can pursue your goals.
• Supported independence with business ownership: LPL Strategic Wealth Services enables you to gain control over your business, book, and clients, while we handle virtually all aspects of the launch of your business, from startup capital to office set-up, and help you run it moving forward.
• Traditional independence: Our Corporate RIA model gives you unprecedented scale, plus the freedom to run your business and manage your clients with our full support, including an exceptional service team, compliance and risk management, technology, and practice management and growth resources.
• RIA custody: Working with LPL gives you the greatest level of freedom and flexibility for you to run your business with complete independence, leveraging our custody platform with the additional benefit of accessing a wide range of services to help support your business and goals.

LPL’s Business Development consultants have a wealth of knowledge and experience, and they’re happy to answer your questions and offer guidance along your path to independence. Reach out to learn more.

2 Cerulli: U.S. Broker/Dealer Marketplace 2022