Independent Advisor Model vs The Wirehouse Model
Over the past several years, an increasing number of wirehouse advisors have made the strategic decision to break away in favor of the independent advisor model.
There are several advantages of transitioning to independence and starting your own wealth management firm.
Four of the most impactful being:
- Higher Payouts and Unlimited Earning Potential
- Flexibility in Product and Investment Choice
- Providing Transparent Fee Structures to Clients
- Creating Your Own Client Service Experience
Let’s dive deeper into these four key advantages and how they can impact both you as an advisor and the clients you serve.
1. Higher Payout Structures and Uncapped Earning Potential
When advisors compare and contrast the differences between the wirehouse and independent models, payouts and compensation are among the most significant. In the wirehouse model, an advisor with an average book of business typically takes home around 35% of their top-line revenue, also known as Gross Dealer Concession (GDC), while advisors with larger books may receive closer to 50%.
On the other hand, the average advisor in Kestra Private Wealth Services' fully supported independent model will take home around 70% of the GDC, and top advisors can keep as much as 85%.
2. Gain Flexibility in Product and Investment Selection to Better Serve Each Client’s Unique Needs
Flexibility is a luxury available only to independent advisors outside the constricting infrastructure of the wirehouse. Independent advisors have the freedom to access a wide range of investment products, third-party managers, model portfolios, and other solutions that best suit each client’s unique needs. In the wirehouse model, advisors are often restricted or forced to use the firm’s proprietary products, which may not be ideal for every client.
However, an open-architecture approach, available through Kestra Private Wealth Services’ fully supported independent model, enables advisors to leverage a comprehensive arsenal of non-proprietary investment products to create customized solutions that better align with the needs and goals of every client.
3. Provide Your Clients with a Transparent Fee Structure
Transparency is the currency of confidence, and confidence builds trust. The higher the level of transparency, the stronger your client relationships will be. Proactively sharing your fee structure has become the new standard for fiduciary advisors. This approach fosters greater trust in you as an advisor while demonstrating your commitment to transparency to the clients you serve.
Regardless of whether you’re working on a retainer, flat fee, hourly rate, AUM, or commission basis, your costs and fees should be transparent and clearly communicated. In today’s increasingly competitive environment, focusing on the old maxim, “price is only an issue in the absence of perceived value,” has never been more critical.
4. Create a Client-Centric Service Experience
The corporate structures within the large wirehouses are designed to benefit the executives and shareholders of these massive corporations—not the clients they serve. With the stroke of a pen, priorities can shift and new policies can be implemented that cause massive disruptions and frustrations among the advisors who are doing their best to create a positive client experience.
Outside the wirehouse structure, independent advisors enjoy having control and stability to run their businesses how they see fit. You’ll have the freedom to prioritize client service and craft your own unique client experience to ensure your clients feel valued and cared for without corporate oversight monitoring every minor detail of how you interact with your clients.
Ready to Breakaway from the Wirehouse and Pursue Advisor Independence?
At Kestra Private Wealth Services, we understand the transformative power of independence and are passionate about guiding advisors on their journey from employee to entrepreneur. That’s why our experienced team of experts designed our turnkey full-service independence model to provide breakaway advisors with everything they need to start their own independent firms with confidence. Start your journey to independence and schedule a confidential consultation with our breakaway experts today.
