Considering Breaking Away from a Wirehouse?

The Pros and Cons of Going Independent

Considering breaking away from a wirehouse to go independent? It’s a big move and a big decision. If you have an entrepreneurial spirit and the desire to run your own business, it may be a risk worth taking. Following are the pros and cons of going independent.

  • Freedom to serve the clients you want in a way you see fit – As an independent advisor, you have control over what clients you serve and how you serve them. If you’ve always dreamed of serving a specific niche clientele, such as professional athletes, physicians or next gen clients, going independent can provide you with the freedom to do so. If you decide later to switch focus, you’ll easily be able to do so as an independent advisor.
  • Ownership – If you’ve always had an entrepreneurial spirit, going independent can be a great opportunity to build your own business. As an independent advisor, you can establish a business model and fee schedules that meet the needs of your clients while compensating you appropriately as your business grows.
  • Flexibility – There are several different opportunities for going independent such as starting your own practice, joining an independent firm or building an enterprise. You’ll also have the flexibility to decide whether you will practice as a fee-only advisor under an RIA model or as a dual registrant who engages in both commission- and fee-based business.
  • Control Over Investments – If you feel stifled by some wirehouse’s proprietary fund requirements, you may welcome the change to an independent model where you are able to provide an open architecture approach to asset allocation. It can be incredibly rewarding to have discretionary control over your clients’ assets and the freedom to develop custom solutions that incorporate a wide universe of investment solutions.
  • Loss Of  Back-office And Facilities Support – One of the biggest challenges faced by advisors who go independent is establishing back-office functions such as operations, reporting, compliance, employee benefits, fee schedules and billing, service menus, IT support, office leasing/purchasing, facilities management and more.

Possible help – Be aware that there are firms geared toward independent advisors who will help with this.

  • Loss Of Brand And Name Recognition – By going independent, you will give up the name recognition and marketing resources of a larger firm. While this might not be a problem if you have an established book of business that will follow you, it can make winning new clients more challenging.

Possible help – Financial advisors often use the name of their clearing firm to give comfort and a sense of security to their clients.

  • Start-up Costs – Be ready for significant start-up costs when starting your own firm, such as computers and supplies, office space, planning and investment research software, rent and utilities, and employee salaries and benefits.

Possible help – A number of firms will give you money either as a forgivable loan or to be repaid at a later date.

  • Fewer Investment Resources – Leaving a large, established firm means that you will also be leaving its investment support, such as research analysts and investment software. You’ll need to establish a trading platform and your own investment process/philosophy while also conducting due diligence on any investments you include in client portfolios.

Possible help – Many independent clearing firms offer a wide range of investment opportunities with open architecture you may not have had at your previous firm.

On a positive note, if you have dreams of going independent, there are firms that can support you with wealth management and technology platforms, investment research capabilities, and more. This approach is often referred to as supported independence because you have the freedom to make decisions for your firm while also gaining access to resources similar to those of much larger firms.

If you’d like help navigating your transition to independence, or for any other career guidance, please email me at, call the office at 212-687-5490 or call or text me at 917-747-4805. At Michael King Associates, we specialize in helping advisors find their ideal career. We are your go-to “MATCHMAKERS!”

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