Breakaway Advisors: Key Considerations Before Going Independent

23 Feb

Breakaway Advisors: Key Considerations Before Going Independent

The RIA model has gained traction over the last decade. Many advisors are attracted to the flexibility and independence the RIA model offers. The rise of Virtual Family Offices, new technology, shifting regulatory guidelines, and the need for more comprehensive solutions for high-net worth clients are also driving more and more advisors to consider breaking away and going out on their own. Before you decide to take the independent advisor route, there are a few things to consider.


One of the biggest challenges to going independent is satisfying the compliance needs for your financial advisory practice. Although the guidelines of your Broker Dealer or wirehouse may seem overly restrictive at times, it is usually necessary and derived from a significant investment of time and energy. As an independent advisor you will become responsible for your own compliance, and the expense of both doing the due diligence and paying the costs for any missteps that may occur.

Back-Office Support and Technology

In addition to compliance, many platforms offer advisors a significant amount of back-office support and/or technological solutions. Sourcing and implementing your own specialized technological solutions and finding the right talent to fill key roles take a great deal of time and money. You will want to carve out enough capital as well as enough time to find, select, implement, and train you and your team.

Marketing and Brand Awareness

Another advantage that comes with associating with a broker dealer or wirehouse is the brand awareness and marketing engine that supports it. Many platforms provide multi-channel marketing solutions in broadcast media (television, radio), social media, and print. With decades of brand awareness, many are “household names” with instant recognition and credibility. As a breakaway advisor you will need to build that brand awareness and cultivate a marketing engine that will fuel organic growth.

Capital Needs

One of the other major considerations an advisor must make is in the realm of capital. Many advisors rely on loans and other incentives from their broker dealer or wirehouse to fund major investments such as acquisitions and recruiting. Any existing loans must be paid in full or refinanced before transitioning away from the platform. It’s also important to look for an experienced lender or other capital partner to help you secure funds for future investments, such as working capital for securing the technology and new team members mentioned earlier or for funding strategic acquisitions.

These are just a few things to consider before making the leap to an RIA model. As with any major business decision, it’s important to thoroughly educate yourself on the options and to seek out expert guidance wherever possible.


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