Giving advisors lift-off towards independence

As the desire to break away from large firms rises among advisors, so does the need for guidance to start anew

Giving advisors lift-off towards independence

Like many other industries in the pandemic, the financial services space is going through its own version of the great resignation as advisors break away from the financial institutions they’ve been in for decades. And as president and CEO of a firm that helps advisors launch and grow their own independent practices, Jeff Gans has had a front-row seat to the unfolding trend.

“We are seeing more and more that advisors are, from a practice management standpoint, frustrated with the bureaucracy they’ve had to deal with in larger institutions,” says Gans, the chief executive at Purpose Advisor Solutions (PAS). “And in many cases, larger institutions have some tough challenges of their own.”

According to Gans, the client-focused reforms that have recently come into effect have forced firms to implement a plethora of new regulatory controls. For organizations with large advisor forces, that means solving for the lowest common denominator, which can be frustrating for the majority of advisors who have a good understanding of how to determine the suitability of products to their clients.

“Advisors want to be able to offer a wide range of products, and they are seeing the shelf being closed down,” he said. “Moving out into a place where you’re setting up your own registrant allows you to make the decision based on your practice, and your level of knowledge and comfort, which really simplifies how you run your business.”

As newly independent advisors become less bogged down with operational and administrative issues, they’re more able to focus on lead generation, selling, and other activities that promote growth. But getting to that point requires not just leaving behind an inhibitive system, but also setting up their own system of operations and controls. That means answering questions that they haven’t had to think about before – which is where PAS comes in.

“It’s a little like building your dream home. You’re driving the process, but you also have meetings with specialists and experts in sub-trades that you probably never even knew existed,” says Marlo Kravetsky, general counsel and chief risk officer at PAS. “We make order out of the chaos for folks not just at transition, but throughout the life of running their firms.”

A simple but powerful example of that support is a checklist of the requirements registered firms must submit regularly. By clearly showing the filings they as independent practitioners need to make, and to whom, and in what frequency, as well as a way to keep track of important deadlines, PAS provides new breakaway advisors much-needed peace of mind.

“You're not going to sleep so well at night if all those questions are just out there, floating unanswered in the ether,” Kravetsky says. “We’re working on a push notification system for advisors, which advisors can program to send them a reminder when they have a crucial deadline coming up. It would also prompt them on where it should be stored for when they get audited on all their filings.”

For advisors thinking about leaping into independence, the uphill climb and heavy lifting of the early days might be off-putting. But instead of fixating on those initial obstacles, Gans encourages them to look further at the opportunity ahead.

“I think starting a business is a challenge for any entrepreneur. It takes an investment in time, and energy,” he says. “But for everyone who's gone through that change, I think it's really worth it.”