Breaking out on your own as an independent advisor can offer many benefits. For one, there is greater autonomy in decision-making without the constraints of corporate policies, plus the flexibility to build a brand and business that aligns with your personal values and vision. Another big upside is the potential for increased income. Independent advisors can set their own fee structures and retain a larger portion of the revenue generated.
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1. Personal Flexibility
Running an independent practice can allow advisors to set their own schedules, giving them the freedom to balance their work and personal life in a way that best suits their needs. This autonomy can lead to increased job satisfaction and overall well-being, as advisors are not bound by the structures and demands of larger institutions. It can also open up time to pursue continuing education and professional development opportunities.
Moreover, personal flexibility enables advisors to choose the clients they work with, which can allow them to build a client base that aligns with their professional interests and values. This can result in more meaningful and fulfilling client relationships, as advisors are able to provide personalized, high-quality service without the pressure to meet corporate quotas or push specific products.
2. Ownership and Control
Starting your own firm can allow you to own and control your business, which is a significant incentive for many professionals in the field. Ownership provides the opportunity to make independent decisions about the direction and operations of the business, enabling advisors to implement their vision and strategies without external interference.
Owning a business could also offer financial rewards that can surpass those of working for a larger firm. Independent advisors, for example, can reinvest profits back into their business, which can lead to additional growth and a more robust, competitive practice over time.
3. Potential to Earn More Money
Independent advisors can set their own fee structures, whether through hourly rates, fixed fees or asset-based fees. This flexibility could also allow them to optimize revenue streams based on services and the value they offer clients. Plus, by not having to share profits with an institution, advisors can retain a larger portion of their earnings.
Moreover, owning a firm can also open up other revenue opportunities to diversify income. For example, an independent advisor could expand services to include tax planning, estate planning and insurance products. By doing so, you can generate additional revenue streams beyond standard investment management, and offer more comprehensive solutions to clients while securing more consistent income and growth opportunities for your business.
4. Chance to Build Something Meaningful
Working as an independent advisor can allow you to focus on business that reflects your values, goals and vision. This can guide you in building the foundation for a meaningful business. For example, if you are committed to sustainable investing, you can choose to build a practice focused on advising clients who are interested in ethical and socially responsible investments.
Furthermore, these principles can become the core of your business, and thereby drive you to develop innovative solutions to meet specific client needs.
5. Autonomous Decision-Making
Independent advisors can select a greater variety of products and services to meet their client needs, which otherwise could be limited or influenced by the corporate policies or sales targets of working in a larger firm..
Having the ability to set your own business strategy means that you can implement your own vision for your business, including marketing approaches, client engagement strategies and operational processes. This control can also position you to respond to market changes and client feedback, thereby maintaining services relevant and competitive.
6. More Freedom and Fewer Constraints
For some financial advisors, the structure and culture of a large firm can feel restrictive. If that’s your perspective, then becoming an independent advisor may be a better cultural fit for you.
One example, an independent advisor can recommend a wide range of investment options, including niche or boutique funds that advisors at larger firms may have to avoid, as they could be restricted to promoting only in-house or approved products.
Another example, an independent advisor could structure fees to align with client preferences, such as offering flat fees or hourly rates, whereas advisors at larger firms might be required to follow a standard commission-based structure.
7. Greater Focus on Clients
Independent advisors can set business goals at their own pace, while advisors at larger firms may be required to meet quarterly or annual sales quotas. And without this corporate pressure, you could focus more on individual client needs.
For example, you may be able to customize a retirement plan for a client at greater depth, depending on the circumstances, than an advisor in a firm who must take more of a general approach that is limited by standardized products, company policies, or sales targets.
Bottom Line
Going independent as a financial advisor can offer you many advantages, from flexibility and financial rewards to the opportunity for building a meaningful and client-focused practice. By owning your own firm, you can break free from the constraints of larger institutions, make autonomous decisions and foster deeper, trust-based relationships with clients.
Tips for Managing Your Advisory Business
- Pre-screen for prospects that meet your client profile. SmartAsset AMP (Advisor Marketing Platform) is a holistic marketing service financial advisors can use for client lead generation and automated marketing. Sign up for a free demo to explore how SmartAsset AMP can help you expand your practice’s marketing operation. Get started today.
- Get a head start on creating a succession plan. Even if you’re a new financial advisor, it’s still important to think about how you’ll manage retirement when the time comes. If you want to create a succession plan and don’t know where to start, check out our introductory guide here. We walk you through the basic steps in setting up a business transition plan.
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