Experts weigh in on the paths to independent wealth management

For advisors, considering the best working style may mean greater benefits

Experts weigh in on the paths to independent wealth management

Many advisors at traditional corporate wealth management firms are at a crossroads – whether to go independent or stay on the safe path – due to the difficulties of the pandemic, rising regulatory pressures, and a variety of other forces shaping the industry.

Devin Cabel, relationship manager and business development manager for National Bank Independent Network, recently presided over a roundtable discussion with three industry experts to discuss the potential advantages, challenges and lessons for advisors trying to venture out.

One advantage is that advisors who run their own businesses may be able to keep more of the client revenue for themselves as opposed to sharing it with a dealer through a compensation grid.

Vipool Desai, president of Ara Compliance Support, said, “In many cases … you'll find the cost of running your own business is lower, and in many cases significantly lower [compared to what you’re paying your dealer].”

In addition, an owner-operator advisor has more control over daily or strategic choices, such as the products-and-services combination they wish to give customers or how to conduct marketing, in contrast to bargaining with a dealer on whether to put their ideas into action.

Beyond being an owner-operator, there are various ways to achieve independence.

Emily Burt, executive vice president and board chair at Cardinal Capital Management, believes that advisor teams that have joined from all over the country benefit from being seen as business owners by their own clients and have more freedom to customize their offering and client service approach than a traditional firm would typically permit.

She adds that the urge to become an independent advisor doesn't always arise right away; it usually happens after advisors have developed a particular level of experience over several years in the business.

When that time comes, they will have gained enough self-assurance in their skills to practice even without the supervision of a conventional financial institution.

“They become known and respected in their communities, and their clients [will be] there for them, for the relationship that they have … not the company that [they're] with,” Burt said. “And I think once they realize that, they make the switch and never look back.”

Read the full report here to know more about industry experts’ take on independent wealth management.