12.05.2022

Lack of Control is Driving Advisors Away from Wirehouses

When you’re an employee, there’s very little within your control. Even advisors managing successful practices at a wirehouse are constantly frustrated by decisions being made – beyond their control – that impact their businesses.

When you’re an employee, there’s very little within your control. Even advisors managing successful practices at a wirehouse are constantly frustrated by decisions being made – beyond their control – that impact their businesses.

The wealth management industry has been going through a seismic shift for the past several years, and part of the disruption is the steady exodus of wirehouse advisors setting out for independence.

No employers.

Why the movement? There are many practical and arithmetic answers, but the emotional component begins with the hunger to be a true entrepreneur coupled with the frustration that builds every time wirehouse management demonstrates just how little control their advisor employees have. Meanwhile, the planning profession has caught up to that demand with technology and platforms to provide everything independent advisors need to successfully launch their own business.

Oftentimes, a change to compensation plans is at the root of advisor frustration. This is especially true during a down market, when advisors, who are mostly fee-based, are already feeling the pressure of decreased income and increased client anxiety. For management to alter grid levels and commission payouts, and raise hurdles for punitive programs like the “growth grid,” indicates that it is not an advocate for advisors’ success. Moreover, for management to position such changes as positives is disingenuous. Such actions are a betrayal and remind advisors where the control lies at a wirehouse.

Advisors work hard every day to sustain and grow their practices. At a wirehouse, they rely on their internal partners to be exactly that: partners. When management surprises advisors with new restrictions or without practical work-around solutions, those relationships feel adversarial and counterproductive to the advisors’ objectives. Compliance concerns, due diligence and regulatory issues all require the utmost attention and respect. Yet, actions that involve clients and their needs and expectations should always be strategic and involve open and honest communications with the advisors.

When advisors are further frustrated by decisions that are out of their control, they will look for scenarios in which they can determine their own destiny. That begins with moving past the life of being an employee and embracing the opportunity – and responsibility – of being a business owner.

Advisors are pursuing their own firms in the independent wealth space because they’re drawn by the advantages of being in control: making their own decisions, pursuing the type of business they envision, serving clients without interference, and keeping more of what they earn. This adds up to control and independence.

For advisors with the entrepreneurial passion and energy to launch their own firm, there are numerous partners – true partners – who can provide the type of model that best fits each their needs. The common denominator among them is the control that the advisor will enjoy. It may differ from platform to platform, but in every case, it’s more than what an advisor has at a wirehouse.

When you have had enough of not being in control as an employee, ask yourself: Do you have enough of what it takes to run your own business? You will not have to go it alone. But to take control, you will need “fire in your belly.” Turn your frustration into that fire and envision a world where you’re the boss.

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