On Wall Street – If You Leave, Will Clients Follow?

June 2015

Financial advisors who are thinking about going independent have many issues to consider, from whether an independent environment is right for them, to what kind of independent model best fits their business and how it will affect their work/life balance.
Culture, environment, leadership and lifestyle are all important considerations as well. But among the seemingly endless list of questions advisors will ask themselves, is: Will clients follow?
It is a natural question and something with which every smart advisor must contend, but it is often such a large and challenging scenario that many advisors never make the move.
That reaction is completely normal. After all, leaving the confines of an established and comfortable setting is difficult in any industry, finance or otherwise.
But having worked in the wealth management business for more than 30 years, first on the wirehouse side and now at an independent firm, I have met with hundreds of advisors who successfully made the transition. And ultimately, every single one of them has identified an even more important question than “will they come?” and that is “is this the right move for my clients?”
The potential benefits of independence for advisors are well-documented: freedom, elimination of bureaucracy, the potential to own a piece of equity and a lack of conflicts.
These are all valid motivations for an advisor to go independent, but in order to ensure that the move is successful, advisors need to view the situation through their clients’ eyes.
Let’s take a fresh look at those benefits:
Freedom: The more freedom advisors have the better equipped they will be to give their clients the best and most unbiased advice and best solutions.
Elimination of bureaucracy: This leaves advisors with more time to focus on their clients’ needs, not the firm’s needs.
Potential to own equity: If an advisor’s success is tied to that of the firm that tells the client that the advisor is invested in and committed to the firm’s growth and success, which can’t happen without happy clients. Happy clients = happy advisor. Perfect alignment of incentives.
Lack of conflicts: Need I say more?
Analyzing a challenging question from a fresh perspective often yields surprising results, and that is certainly the case here. But when advisors take a step back and truly look at their potential move through their clients’ eyes, they are often very surprised at how much both sides benefit.
Remember that the relationship between a client and the advisor is what matters the most. Advisors who have proven their value to clients and earned their trust through hard work, creativity and personalized attention, find that 90%-plus of clients will follow them anywhere.
But advisors should make sure that the move is in their clients’ best interests, too, and then communicate that to them. The better they can understand that this will benefit them as much as the advisor, the smoother and more successful the move to independence will be.
Greg Franks is managing partner and president of Snowden Lane Partners.
This story is part of a 30-day series on going independent.
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