Top 5 Reasons Financial Advisors Choose to Go Independent

In a 2023 Life Goals study, from MBO Partners, researchers identified the top three life goals of American workers: spending enough time with family, leading a fulfilling life, and getting the most out of life.

In each of these categories, independent workers reported slightly higher satisfaction and feelings of success than traditional employees. Which begs the question—what makes independence so fulfilling, especially to 71% of financial advisors who prefer this model*? 

Reason #1: Personal Freedom, Flexibility, and Control 

“To me, freedom and flexibility have two meanings. One of those meanings is that I have the ability to control my schedule the way that I need to. I have two children that are five and three years old, so I frequently have things come up that take me away from work.” – Nicole Burdick, AAMS, Money Maven Financial founder

From the Great Resignation to the Great Rethink, it’s clear that we’ve emerged from the pandemic crisis with renewed emphasis on work-life balance. In a recent Oracle AI@Work study, 88% of respondents said the meaning of success has changed for them, and that they’re now prioritizing things like work-life balance, mental health, and flexibility. If that resonates with you, it might be time to consider a move to independence. 

As an independent financial advisor, you have the freedom to control where and when you work. You can flex your schedule as needed and leverage an array of time-saving resources that take the duties of business ownership off your plate and free you up to spend more time on what matters most to you.

“The other thing that’s really important to me to have freedom around is being able to serve my clients the way that I think is best.” – Nicole Burdick, AAMS, Money Maven Financial founder 

For many advisors, the most rewarding aspect of their career is being able to make a positive difference in their clients’ lives. But it’s difficult to do that with limited technology and investment platforms. By gaining access to objective research, open architecture platforms, and non-proprietary products, you can act as a fiduciary for your clients and offer the best solutions to meet their unique needs and goals.

Reason #2: Build Your Own Business, Your Own Way

No matter where you are in your business lifecycle, you can count on one thing—change. From shifting client needs and technology innovations to regulatory updates, your business needs to be able to adapt and evolve to stay competitive.

Independence gives you the flexibility to explore—and potentially shift to—other business models and the freedom to determine the pace and scale of your growth. You have the option to engage strategic consultants to help you recruit and train staff, optimize marketing, explore mergers and acquisitions, and prepare for retirement.

And by removing the limitations on your technology solutions, you can customize a technology stack that enables you to connect with your clients and automate time-consuming processes without paying for features you don’t need.

Reason #3: Maximize Your Earning Potential

You also get to keep more of what you make in the independent channel. On average, independent firms tend to provide advisors with a higher payout, especially given that wirehouse firms may restrict payment on certain client types and allocate some payout in the form of deferred compensation.

Consider these statistics from Cerulli’s 2022 U.S. Broker/Dealer Marketplace report*:

Reason #4: Ability to Leave a Lasting Impact

In the independent channel, you have a greater chance of maximizing the value of your business when you’re ready to sell. Privately owned books can be sold in the open market and are often more attractive to buyers. By increasing your sales potential, you also increase the likelihood of receiving a competitive sales price. And you can save more of what you receive by structuring the deal as a capital gain as opposed to ordinary income, which can be a significant cost differential.

When it comes to succession planning, some wirehouse firms’ policies may limit the control you have over choosing your successor. This is a concern for advisors who want to ensure the handoff is smooth and the new advisor is a good fit for their business model and clients.

An independent firm can help support you with strategic succession planning that’s in the best interest of you, your clients, and your legacy. And when the time comes, you can often lean on them to help find the right buyer and facilitate the process.

Reason #5: Find the Best Support for Your Business

Many independent firms offer similar benefits and services, but as you’re compiling your shortlist of potential strategic partners, it’s important to evaluate the following to ensure you’re aligning with a firm that will make it easier for you to do business.  

• Self-clearing: Eliminate third parties and competition for your clients, streamline compliance, and reduce costs—with savings passed on to you through better payouts and reduced fees
• Compliance and risk management: Stay ahead of ever-changing rules and regulations so your business stays protected
• Business solutions: Outsource the day-to-day operations of your practice with access to a full suite of support services and strategic expertise for marketing, administrative, technology, and growth consulting
• Wealth management: Serve your clients’ best interests without needing to use proprietary products or services

Pursue Your Vision of Fulfillment with LPL

However you define fulfillment—better work/life balance, flexibility, or more control over the business you’ve worked hard to build—we’re here to support you. Our Business Development consultants have a wealth of knowledge and experience, and they’re happy to answer your questions and offer guidance as you consider a move to independence.