5 Red Flags It May Be Time To Leave the Wirehouse
Are you a wirehouse advisor contemplating independence? You’re not alone.
In recent years, hundreds of wealth management professionals have fled the wirehouse environment in search of freedom — whether it’s to better serve clients, be a true entrepreneur, or receive higher compensation and control. In fact, 2020 marked the first year independent financial advisor firms collectively managed more money than their wirehouse counterparts.
That said, leaving the wirehouse is a big decision and one that should not be taken lightly. To know if it’s the right time to make your move, look out for these five red flags.
- Red flag #1: Your firm does not have a people-first culture. You have a sneaking suspicion the advisor-client relationship is no longer the center of the universe. In other words, your clients’ goals are not the firm’s primary focus. Along with this, you may sense the firm does not value you as a person or your clients as people. Instead, you feel more like a distribution channel to cross and upsell the company’s product mix.
- Red flag #2: You’re craving true entrepreneurship. Your current wirehouse firm may tell you you're an entrepreneur, but if you’re itching to be a real business owner, the independent channel is right for you. Owning an independent financial advisory firm allows you to create a brand identity, mission, website, and employee culture that is authentically yours. Big-name wirehouses, however, restrict this as it would conflict with their own corporate branding.
- Red flag #3: You experience frequent compensation changes. For the third or fourth time in your career, the wirehouse firm has made changes to your compensation plan that are designed to meet institutional-level goals, not your goals. They may stop paying you on smaller accounts, or take a chunk of your paycheck if you don’t meet a certain number of banking relationships. Ultimately, this serves the best interest of the company’s bottom line and shareholders — not you or your clients.
- Red flag #4: You do not have ownership of your clients. The wirehouse makes it clear the client is theirs and not yours. To them, the firm built the mechanism for the client relationship to come into being — you were not a critical component of the process. Meanwhile, you rightfully believe you’ve worked hard to earn your clients’ trust and loyalty. You know, that for years, your clients have stayed with you because of you. They trust you and will follow you.
- Red flag #5: You want freedom to access better technology tools. Wirehouse firms tend to only offer one-size-fits-all wealth management systems to allow for widespread integration. Consequently, this prohibits you from accessing customizable and advanced technology solutions that would both streamline your workflow and enhance client service. Independent wealth management firms, on the other hand, offer much more freedom and flexibility to choose tech tools that work best for you and your clients.
If you’ve noticed any of these warning signs, it could be time to exit the wirehouse and make the shift to independence. However, going independent doesn’t mean you have to go it alone.
By partnering with Kestra Private Wealth Services, you can enjoy the merits of business ownership with full-service support behind you. Start a conversation with us today to learn more.