The Modern Advisor

Break Away Without Breaking Your Business

By :
Vise Staff
Financial Advisors are breaking away from big institutions at increasing rates every year. The process isn't easy; here's how to avoid the mistakes many advisors make when breaking away.

Independent advisors hear it all the time: it’s not easy to run a business. You need to find clients, develop an investment strategy, and churn out thoughtful content. And that is all before you can even set up a meeting. Behind the scenes, you’re also responsible for the paperwork and administrative tasks of keeping a business open. It’s stressful, and it’s hard. But as a growing number of newly independent advisors will attest, the ups far outweigh the downs. 

To help make your journey easier, we’ve outlined five common mistakes independent advisors should avoid. 

1. Not Retaining a Lawyer

When you go independent, you may not report to any one person, but there are still all kinds of rules and regulations that you must follow. Unfortunately, that means you’ll need to speak to a lawyer. 

First things first: Do you have a non-compete from your previous employer? It’s possible that some non-competes are effectively unenforceable; it’s also important to realize that some states have eliminated them.

Once you’ve handled non-competes, your lawyer’s work isn’t done. You’ll likely need assistance registering with the SEC, and you may need further advice  about establishing the correct systems for payroll, operations and compliance. Running an independent RIA, after all, requires you pick up tasks that an employee at a broker dealer or wirehouse would typically ignore. 

2. Expecting Too Much From Your Custodian

If you’ve worked for a large wirehouse or broker dealer, chances are that you’ve never had to set up your entire tech stack. If you don’t have prior experience assembling a modern toolset, you might expect that your chosen custodian will provide a majority of the technology necessary to do your job. That’s not the case

Although having a custodian is necessary,  much more is required to run a practice smoothly. Thankfully, the explosion of fintech solutions means that you have help for almost every need and type of practice. Think about your day-to-day schedule. Wouldn’t it be nice to have a tool that tackles all those frustrating tasks? Chances are, there are tools that, once set up, will make your daily work life significantly easier, and allow you to effectively grow your practice. 

3. Ignoring the Broker Protocol

No one wants to go independent on uncertain legal and moral footing, so it’s vital that you research the Broker Protocol and learn if your broker dealer is a signatory. Under the terms of the protocol, it states, “When RRs move from one firm to another and both firms are signatories to this protocol, they may take only the following account information: client name, address, phone number, email address, and account title of the clients that they serviced while at the firm.” Make sure you’re not breaking the rules and that you stay in good standing with the financial advisor community.

4. Sending the Wrong Messages to Clients

Independence is daunting for a financial advisor. It’s also a challenge for clients, who may not understand what it means for them, why their advisor is leaving their firm, and what it means for the future of their relationship. 

Just as patients trust a family doctor to be available, many clients treat their financial advisor as a uniquely reliable and dependable presence in their busy lives. So hearing that their financial advisor is “leaving” — even though they’re still available to manage money — can be distressing. It’s absolutely essential that you take the time to craft appropriate and specific messages for your clients. A single generic email isn’t going to cut it: At this juncture, you need to take the utmost care of your clients’ sensitivities. 

Without information about your old clients, as stated in the Broker Protocol, and without a fully-functioning tech stack, it may take time to get your clients’ accounts up and running. Make sure  you tell them about the positive impact that these changes will bring. You don’t want old clients to believe that your new business has made you less responsive to their needs and desires.

5. Waiting Too Long

Making the leap to independence is a challenge,  so it’s tempting to put off or even cancel this massive change. Don’t let nervousness hold you back from a fruitful career with greater freedom and more rewards. Taylor Wilson, an RIA who broke away said, “The only thing I regret is not breaking away sooner. Leaving behind the sales quotas and high commission products of a broker dealer has allowed me to better serve my clients and increase my income in the process."

Sign up to keep up with new updates and content!

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
ViseFeatures
1 World Trade Center, Suite 84A
New York, NY 10007
Legal / Privacy Policy
Copyright © 2020 Vise, Inc.. All Rights Reserved

Vise AI Advisors, LLC is an investment adviser in New York, New York. Vise AI Advisors, LLC is registered with the Securities and Exchange Commission (SEC). Registration of an investment adviser does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. Vise AI Advisors, LLC only transacts business in states in which it is properly registered or is excluded or exempted from registration. A copy of Vise AI Advisors, LLC’s current written disclosure brochure filed with the SEC which discusses among other things, Vise AI Advisors, LLC’s business practices, services and fees, is available through the SEC’s website at: www.adviserinfo.sec.gov.

Please note, the information provided on this website is for informational purposes only and investors should determine for themselves whether a particular service or product is suitable for their investment needs. Please refer to the disclosure and offering documents for further information concerning specific products or services.

Nothing provided on this site constitutes tax advice. Individuals should seek the advice of their own tax advisor for specific information regarding tax consequences of investments. Investments in securities entail risk and are not suitable for all investors. This site is not a recommendation nor an offer to sell (or solicitation of an offer to buy) securities in the United States or in any other jurisdiction.

This site may contain forward-looking statements relating to the objectives, opportunities, and the future performance of the U.S. market generally. Forward-looking statements may be identified by the use of such words as; “believe,” “expect,” “anticipate,” “should,” “planned,” “estimated,” “potential” and other similar terms. Examples of forward-looking statements include, but are not limited to, estimates with respect to financial condition, results of operations, and success or lack of success of any particular investment strategy. All are subject to various factors, including, but not limited to general and local economic conditions, changing levels of competition within certain industries and markets, changes in interest rates, changes in legislation or regulation, and other economic, competitive, governmental, regulatory and technological factors affecting a portfolio’s operations that could cause actual results to differ materially from projected results. Such statements are forward-looking in nature and involve a number of known and unknown risks, uncertainties and other factors, and accordingly, actual results may differ materially from those reflected or contemplated in such forward-looking statements. Prospective investors are cautioned not to place undue reliance on any forward-looking statements or examples. None of Vise AI Advisors, LLC’s or any of its affiliates or principals nor any other individual or entity assumes any obligation to update any forward-looking statements as a result of new information, subsequent events or any other circumstances. All statements made herein speak only as of the date that they were made.

Certain hyperlinks or referenced websites on the Site, if any, are for your convenience and forward you to third parties’ websites, which generally are recognized by their top level domain name. Any descriptions of, references to, or links to other products, publications or services does not constitute an endorsement, authorization, sponsorship by or affiliation with Vise AI Advisors, LLC with respect to any linked site or its sponsor, unless expressly stated by Vise AI Advisors, LLC. Any such information, products or sites have not necessarily been reviewed by Vise AI Advisors, LLC and are provided or maintained by third parties over whom Vise AI Advisors, LLC exercises no control. Vise AI Advisors, LLC expressly disclaim any responsibility for the content, the accuracy of the information, and/or quality of products or services provided by or advertised on these third-party sites.

Any reproduction or distribution of this website, as a whole or in part, or the disclosure of the contents hereof, without the prior written consent of Vise AI Advisors, LLC is prohibited.

Monte Carlo simulations have material limitations. Market movements may be more or less extreme and more or less frequent than those that occur in the model. Certain asset classes and investments have shorter histories than others and may not be as reliable. Market Events and other factors may influence the reliability of the potential outcomes.

All investment strategies have the potential or profit or loss. Changes in investment strategies, contributions or withdrawals, and economic conditions, may materially alter the performance of your portfolio. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment or strategy will either be suitable or profitable for a client’s portfolio. There are no assurances that the portfolio will match or outperform any particular benchmark.

Back-tested performance results have inherent limitations, particularly in the fact that these results do not represent actual trading and may not reflect the impact that material economic and market factors might have placed on the advisor’s decision-making if the advisor were actually managing the clients’ money.

Nothing provided herein constitutes tax advice. Individuals should seek the advise of their own tax advisor for specific information regarding tax consequences of investments. Investments in securities entail risk and are not suitable for all investors. This is not a recommendation nor an offer to sell (or solicitation of an offer to buy) securities in the United States or any other jurisdiction.

You must be a US-Registered Investment Advisor to use the Vise Platform.
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.