Break Free from Wirehouse Pain Points

Wirehouse Advisor Pain Points? Consider Independence

While wirehouses used to provide a one-stop-shop for financial advisors and professionals looking for support, added barriers have left more and more business owners looking to break away and go independent. Many have become frustrated with changing and complicated compensation, client restrictions, and more that comes from working with a wirehouse. New “supported independence” models have made it easier to break free from the wirehouse and run your business on your terms, allowing you to focus on client relationships.

The two main pain points that advisors often face within the wirehouse framework include: lack of flexibility in compensation and lack of support in business operations. These pain points may be beginning to overshadow “brand recognition” which has traditionally been the main benefit of wirehouses.

As advisors opt for more independence, they may also be looking to create their own niche and align their unique brand with their values and goals.

Advisors Find Wirehouse Compensation Complicated

Wirehouse advisors are paid based on the assets they generate for the firm. However, payouts are hard for advisors to truly understand as the way these assets are valued can be complicated and may not always be transparent. For example, some wirehouses may value certain assets more highly than others or may not credit advisors for the full value of the assets they generate. This scenario can make it confusing and difficult for advisors to know how their compensation is calculated, leading to frustration and dissatisfaction.

Wirehouse advisors also contend with the fact that they may not always have access to the best investment products and services. They’re often forced to sell specific products, losing the ability to effectively serve their clients and provide the best possible solutions. This is because wirehouse firms typically have preferred relationships with certain vendors and may not offer the same level of choice and flexibility that independent firms can access. This can limit an advisor's ability to meet the needs of their clients and may lead to lost business.

Additionally, wirehouse advisors typically receive a lower percentage of the assets they generate than independent advisors. This is because the wirehouse takes a portion of the assets as a fee for providing services and support. The amount that the wirehouse charges can vary, but it’s typically around 1-2%. This can eat into an advisor's earnings and make it more difficult to generate income.

Advisors Can’t Find Adequate Support from Wirehouses

Apart from compensation complications, advisors may feel unsupported and restricted in pursuing what’s best for themselves and their clients. Wirehouses may require the advisor to maintain a certain level of assets under management (AUM) and may charge the advisor for not meeting this requirement.

The wirehouse’s overriding goals are to make money and to grow larger. To achieve these goals, they tend to focus on recruiting new advisors and clients, rather than on providing support to existing advisors. Advisors with these types of firms often feel they are not supplied enough leads or given the adequate resources to maintain and pursue progress amid ever-changing regulations, legal notifications, and more. Resources may be limited where they’re needed most, such as administrative support, operational support, and technology support for remote offices and client communication.

This lack of support can lead to advisor burnout as advisors start feeling perpetually overwhelmed. It may also lead to a lack of growth and personal development, which is essential for an advisor’s continued success. Eventually, this pain point may lead advisors to explore opportunities to break away from the wirehouse, or in more serious circumstances, leave the industry entirely.

Is It Time to Go?

Many financial advisors feel that client experience is the most important part of their wealth management business. However, when your wirehouse begins to get in the way of your advisor-client relationships, it may be time to begin the transition process to going independent. Whether your clients are asking for solutions that you don’t have access to or can’t offer, or you feel overwhelmed and unsupported when it comes to human or technology resources, supported independence may be the solution.

To help you explore your options and discover what form of independence is right for you, The Essential Guide to Independence white paper is available to download. You’ll learn about different independent business models, support tiers, compliance best practices, tips for transition success, and much more.

Benefits of Leaving the Wirehouse and Going Independent

With new options for financial entrepreneurs to work for themselves, former wirehouse advisors are finding success as independent financial advisors.

As an independent financial advisor you can:

• Own your client book, have full control over your clientele, and choose who you do — and don’t — work with.
• Enjoy the freedom to offer products that work best for your clients without worrying about quotas. LPL’s scale often results in lower pricing and fees.
• Have a clear understanding of compensation; LPL offers highly competitive payouts with most affiliation models offering between 90% and 100%.
• Create a larger technology stack and have access to tech support.
• Grow as quickly as you desire with acquisition support.
• Plan a legacy that keeps your business in good hands. At LPL you’ll get support from a field management team.
• Outsource the running of your business and focus on your clients and company culture.
• Experience a flexible work environment, working where and how you want.

What Does Independence Look Like at LPL?

When it comes to breaking away from the wirehouse and pursuing independence, LPL offers a wide range of resources and business model options advisors can choose from as they define the level of support they want and build their business their way.

“We know it’s really important to help you understand all of your options,” said Kimberly Sanders, senior vice president, Strategic Business Development. “Through our Advisor Fit consultation process, we identify the model that’s the best fit, then take the time to curate and customize that model so it feels like the ideal fit.”

Our business models help eliminate typical pain points for advisors.

• Employee model: Create your perfect practice where you can build value, own your client relationships, and choose how you want to grow — all at the highest cash payout level in the employee model marketplace.
• Private Wealth: Discover a more advantageous payout, complete client ownership, and a dedicated support team so you can focus on high-net-worth clients.
• Strategic Wealth: Own your business without the hassles of operating it. A team of experts will work as an extension of your staff to run the day-to-day elements of your advisory business.
• Traditional independence: Join LPL as a fully autonomous business owner and lean on us for as many support functions as you like, up to and including compliance via our Corporate RIA.
• RIA support: Gain holistic support to start your own RIA and control every aspect of your business — down to compliance and risk management — while maintaining access to LPL’s full suite of business and growth solutions.

Ready to Make the Leap?

Once you’ve decided it’s time to break away from the wirehouse and go independent, begin by talking to other advisors who have made the move. Consider speaking with small business owners outside the industry about owning their own business. If you’re ready to gain more support, contact an LPL Financial recruiter for a confidential conversation about becoming a part of the LPL family.