5 Red Flags Indicating You Should Breakaway from the Wirehouse
Over the course of your career as a financial advisor in the wirehouse model, you’ll constantly be evaluating and contemplating the possibility of breaking away to take ownership of your book of business, gain your independence, and become a true entrepreneur.
Over the past several years, the largest wirehouse institutions have continued to lose a large number of top advisors as more have migrated to independent broker-dealers and RIAs in a swift fashion, driven by higher payouts, greater freedom, and the ability to provide more comprehensive service to their clients.
In 2024, nearly 1,500 advisors left wirehouses to pursue independent options. With each passing year, it becomes increasingly clear that the numerous advantages of independence greatly outweigh those of the wirehouse model. Be on the lookout for these five red flags that signal it’s time for you to begin plotting your exit strategy so you can experience the transformative power of advisor independence.
Red Flag #1: Your Firm Does Not Have a People-First Culture
If you ever start to feel like your client relationships are no longer the firm’s primary focus, it’s probably time that you begin exploring paths to independence for the sake of you and your clients. Once your firm starts treating you like just a number instead of a valuable individual, you’ll be nothing more to them than a distribution channel, as they’ll force you to cross-sell checking and savings accounts, mortgages, credit cards, and proprietary investment products that are likely not in the best interest of your clients.
Red Flag #2: You Crave True Entrepreneurship
After spending some time operating in the wirehouse model, you’ll begin to see the cracks in the story of how they tell you that you’re an entrepreneur, which will make you crave more autonomy, freedom, and control. Once this desire is consistently at the forefront of your mind, it’s the right time to make a move and build a business that is 100% yours. Discover how other former wirehouse advisors have navigated this mindset shift as they began their journey to independence in this episode of our podcast.
By starting your own independent wealth management firm, you’ll have the ability to create your own brand, pursue innovative marketing ideas, build your own website, craft client messaging, and build a culture that is authentically yours without the limitations and restrictions of a large corporate entity dictating what you can and cannot do.
Red Flag #3: You Experience Frequent Compensation Changes
If your wirehouse firm has made multiple changes or is consistently changing your compensation plan, it’s probably time to start exploring independent options. When wirehouses change their compensation plans, those changes are designed to meet institutional-level goals and grow their bottom line—not yours.
These changes can be major or relatively minor, depending on several factors. For example, they may stop paying you on smaller accounts under a certain dollar threshold or take a chunk out of your paycheck at the end of a quarter if you didn’t meet a certain number of banking relationships. Ultimately, these compensation changes serve the best interest of the wirehouse executives and shareholders by dipping deeper into your pockets.
Red Flag #4: You Do Not Have Ownership of Your Clients
As you progress in your career and build a strong book of business, your wirehouse firm will probably take small actions to reiterate that the clients belong to the firm and not you. This is a sign that they’ve begun to feel threatened by your ability to build meaningful connections with clients. The wirehouse wants you to second-guess yourself and your abilities, so you’ll fall into the mental trap of believing they are the most critical component of the process, not you.
But deep down, they know if you leave to start your own independent firm—those clients will follow you because they trust you. You were the one who invested years in forging those relationships and building strong, trusting bonds—not the firm. If your firm is beginning to meddle with your client relationships, it’s clear that you’re ready to breakaway and go independent because the wirehouse is already attempting to hedge its bets.
Red Flag #5: Outdated Technology Tools Are Holding You Back
When it comes to the latest and greatest technology tools, wirehouse firms tend to be lagging adopters, which can put you in a tough spot when it comes to processes, workflows, and enhancing client service. Wirehouses prioritize widespread systems integration to make everything more consistent and easier for their IT teams to manage, even if it means compromising service.
If you’re getting bogged down by technology limitations, transitioning to the independent space will give you the freedom, flexibility, and innovation you crave. As an independent advisor, you can implement and utilize far more technology tools while customizing everything to meet your needs and create the service experience you’ve envisioned. Check out this episode of our podcast to see how one of our independent partner firms has begun leveraging new technology to strengthen its client relationships.
Take the First Step Towards Independence If You’ve Experienced Any of These Red Flags
If you’ve started to experience any of these five red flags, it’s likely time that you begin to seriously consider breaking away and going independent. While transitioning from the wirehouse model to independent business owner can be a big leap, it doesn’t mean you have to go at it alone.
At Kestra Private Wealth Services, we’ve helped hundreds of wirehouse advisors breakaway and pave their own path to independence. Whether you want to start your own firm or join an already established one, we have the experience, expertise, and infrastructure to help you breakaway with confidence.
Schedule a meeting with our experts to explore your breakaway options and learn how our fully supported independent model can deliver everything you need to exit the wirehouse house and experience the transformative power of independence.
