Leaving the Wirehouse? Here are Four Valuable Points to Consider
Over the past several years, more and more W2 model wirehouse advisors have begun breaking away from the captive model to experience the transformative power of independence. Whether you’ve been in the wirehouse model for decades or are in the early stages of your career as a financial advisor, you’ve likely considered how your life, career, clients, and earning potential could be better as an independent advisor and true entrepreneur.
At Kestra Private Wealth Services, we’re passionate and experienced when it comes to guiding W2 and wirehouse advisors on their journey to independence. So, before you make the leap to independence, consider these four key questions to help you evaluate your unique circumstances as you prepare to exit the wirehouse.
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 leave the wirehouse behind and become an entrepreneur, the first question you need to ask yourself is, “how independent do I want to be?” Do you want to manage every single aspect of your independent firm, from choosing phone vendors to purchasing office furniture? Or are you looking for an independent model that provides more comprehensive service and support to take care of those added logistics on your behalf so you can focus on serving your clients and growing your business?
To help you figure out how independent you want to be, start by assessing 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 with experience in corporate real estate who can handle the intricacies of finding a prime office location, building out a professional office space, and maintaining a corporate lease?
- Are you a tech-savvy individual who wants to buy, build, and integrate a technology stack and keep it running effectively?
It’s important to consider all the details that go into running your own firm beyond just engaging and serving your clients. The more you decide to take on without additional support, the less time you and your team will have to interface with clients.
If your primary goal is to own your book of business and you’d rather not take on all the added responsibilities of starting an independent firm, a fully supported independent model is likely the right solution for you. At Kestra Private Wealth Services, our turnkey full-service independence model removes the regulatory and economic barriers of entry that prevent wirehouse advisors from breaking away and starting their own firms. Our centralized compliance, cutting-edge technology, real estate services, and equipment support enables advisors to offload the back-end logistics and responsibilities of operating a business so they can focus on serving their clients and adding new ones.
2. What Does Your Client Base Look Like?
Your clients are the cornerstone of your business, and you don’t want to lose them when you transition from the wirehouse model to the independent space. So, it’s natural that client retention is one of the top areas of concern for advisors thinking about breaking away. However, the data shows that it’s not as big of a hurdle as you may believe, and it’s likely that 80% of your clients will transfer their assets to your new independent firm within six months.
Wealth management and financial planning is a people-centric and relationship-driven business. Your clients are connected to you first and foremost, not the large institutional name on their account statements. If you’ve put in the work and built strong, meaningful relationships with clients that you sourced and earned yourself, you’ll likely be successful in getting your independent firm up and running.
However, if you’ve inherited most of your clients or did little to earn their business, those clients may be harder to retain when making a move to the independent space. It’s important to take inventory and truly understand how connected you are to all your existing clients because if you haven’t built those trusting and personal relationships, you’ll have a more difficult time getting your independent firm off the ground.
3. Does Your Current Wirehouse Firm Adhere to Broker Protocol?
If you’re considering leaving the wirehouse to start your own firm, you must leave your current position in good legal standing. Otherwise, you could create massive headaches if you don’t abide by your current firm’s rules. That said, confirming whether or not your current wirehouse adheres to Broker Protocol or if they are a non-protocol firm.
- If your firm follows Broker 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, you are not allowed to take any of this information with you, and you’ll have to rely on pure memory to rebuild your book once you resign.
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 advisors at your previous firm 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 breakaways 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. What Do You Want Your Brand to Be?
After spending years of your career being told what color tie to wear, what investment philosophy to follow, and how to engage with clients by a large wirehouse firm—nothing is more satisfying than being your authentic self personally and professionally. As an independent financial advisor, you have the opportunity to create your own brand that reflects the values and ambition that you and your team represent.
Everything about your brand, from your website to your logo to your social media presence and your office space, will impact your image and your ability to attract and retain client relationships. You’ll want to have a style and brand identity that is distinctively yours. However, having assistance with these aspects from an experienced partner who’s helped hundreds of advisors exit the wirehouse and launch their own firms can streamline the process so you can hit the ground running.
Transition to Independence with Confidence
Leaving the wirehouse is a big decision, but if you properly prepare and choose the right partner to provide the guidance and support you need, it will be the most rewarding decision of your career. If you’re ready to take that next step and pursue independence, our team of wirehouse veterans and breakaway experts have developed the industry’s premier full-service model to help advisors like you start independent firms with ease.
Our model pays for and manages all your real estate, technology, equipment, and compliance costs in perpetuity so you can focus on serving your clients while we handle everything else. To learn more about going independent with Kestra Private Wealth Services, request a confidential consultation with our team.
