Leaving the Wirehouse? Here are Four Valuable Points to Consider

Robert Bartenstein | 11/26/2018

Advisors are increasingly reaching a fork in their career paths, one that demands action on the nagging urge to make the move to independence and true business ownership. Often, the only thing holding them back is the “How” of getting out and standing up their own business. Whether from prior experience or a DIY personality, some advisors are comfortable taking on that logistical challenge. Others may want to remove as much of the risk as possible by partnering with subject matter experts while they focus on their core strengths and client relationships.

In either case, starting your own business is an ambitious goal, and one that can reap great rewards. But before you jump in headfirst, it’s important that you consider exactly what kind of situation you’re in.

If you’re thinking about leaving the wirehouse, here are four points to consider.

1. How independent you want to be
   If you’re ready to step out on your own, the first question you need to ask yourself is how independent you really want to be. Do you want to manage your own business entirely, without help, or are you looking for something closer to a full-service model, which will handle the back-end components of managing a business while you lead the way? If your end goal is to simply (and finally) own your business and you’d rather not try to learn how to integrate technology, for instance, full-service independence might be the right solution.  
   
   Begin with an assessment of your team’s skill set. Do you have someone who can handle the nuances of compliance, deal with regulators in the event of an audit, and be accountable for those outcomes? What about real estate – do you have someone to handle all the intricacies of finding and maintaining a corporate lease? Are you a “tech person” ready to buy and build the right systems, integrate them, and keep them running effectively? If not, you may want to partner with a full-service platform for assistance in these areas. Additionally, consider how you want to balance your time when it comes to running your business versus interacting with clients. The further you lean toward client interaction, the further you’ll want to skew toward a full-service model. 
   
   At Kestra Private Wealth Services, we remove the regulatory and economic burden associated with owning a business. Our centralized compliance, cutting-edge technology, and real estate services offer advisors the freedom to focus on their clients instead of back-end business operations. 
   
   

2. Consider your client base
   A financial advisor needs clients to survive. Our experience usually indicates the vast majority of clients follow advisors who go independent, though some may not. If you’ve truly built your book of clients over your career, you’re likely to have a good start getting your business up and running. However, it’s important to have an honest understanding of how many of your clients actually feel connected to you.
   
   Take a hard look at your book and examine which accounts you built yourself, versus those you inherited, bought, or acquired through other means. Put your ego aside and be honest with yourself and your team. If your book is mostly comprised of accounts you sourced and earned yourself, you’re going to be fine: those clients are the most likely to stick with you.
   
   

3. Clarify your legal standing
   You want to leave your current job with no strings attached – especially not legal strings. Your current wirehouse will either be considered a protocol or non-protocol firm. If it’s protocol, you’re allowed to take five specific pieces of information about clients you serviced at the firm: names, addresses, phone numbers, email addresses, and account titles. For non-protocol, that number is zero.
   
   This means you’ll need to rely purely on memory to rebuild your book once you leave your current company. If there is any indication, or even a mix-up, that you’ve left with some of this information, you could be held up by legal action for days or weeks – giving other people time to swoop in and engage with your clients. Make sure you’re familiar with your company’s policies before you leave. 
   
   Given the overwhelming success of both protocol and non-protocol transitions across the industry, there is simply no reason or excuse to do anything but play by the rules. Doing so avoids expensive and stressful complications.
   
   

4. Think about your brand
   The final step is creating your own brand. There are few things more satisfying than authentically being yourself personally and professionally. Your brand should reflect the best elements of who you are and what your team represents. Building out everything from your website and logo, to your outreach and media strategy can affect the clients you attract and keep. While you want these to have a style that is distinctively yours, having assistance with these aspects behind-the-scenes can help streamline this process and create a more solid, cohesive result. Most advisors benefit from engaging professionals in this area. The look, feel, and polish of your brand will benefit while the message stays true to who you are.

Leaving the wirehouse is a big decision, but with the right knowledge and support, one that can be very rewarding. If you’re ready to take that step, make sure you’re doing it with the proper preparation and partners behind you.