- On October 8, 2017
The breakaway movement to independence is an industry mega-trend, but there are many traditional advisors at wirehouse and regional firms who wince at the thought of the responsibilities and time required to be an owner and CEO of their own firm.
Statistics and survey results vary, but independent practice principals can spend 40% to 60% of their time on “business owner” activities, especially during the first years of acclimating and refining processes and efficient systems of management.
While thinking about the business owner responsibilities cause excitement for some wirehouse advisors, for others, the thought of owning and running an independent firm, and the amount of client facing time available usurped by ownership responsibilities, brings anxiety. Not all unhappy wirehouse advisors want to be full blown entrepreneurs.
While independent practice principals overall do a great job in wearing multiple hats, running their business and supporting and interfacing with their clients, the skill sets needed come more naturally to some than others.
To run an efficient practice so the owner’s time isn’t monopolized by the day to day operations of the business, owners need to be skilled in hiring the right people and staff management, delegating tasks and responsibilities to their team and third-party vendors, having established processes to streamline middle and back office operations, and the ability to continually shift from business owner mindset to client wealth manager mode, multiple times per day and even per hour.
Breaking away to independence through Soft Landings:
- The “soft landing” option is for traditional advisors who want the autonomy and favorable economics of independence, but who doesn’t want to deal with all of the responsibilities and time investment required to run a practice.
- Park your business with an IBD or RIA established independent offices throughout the country looking to rent space and share receptionist, back office, and compliance support.
- It’s a win-win in that you own your practice but outsource many of the time-eater and overhead costs to another owner who is looking to scale their set overhead costs.
- This allows for breakaways to not have to be consumed with an initial office buildout, hiring all of the needed staff, and taking on all of the typical business owner tasks required.
- Helps to provide a smoother transition to independence by focusing on your client transition and retention instead of initially designing and building out an office.
- Because you’ll be plugging in with an established IBD or RIA practice you’ll have the additional onsite support from a team who is already familiar with the platform, systems, processes, technology and nuances of the firm you just joined, helping to both ease and accelerate your acclimation process.
- Soft-landing, Plug-in options offer breakaways the ability to net about the same payout (or better) than the independent owner they are plugging into enjoys, without the same hassle and time investment.
- Most independent business owners who have an office, team, and the overhead that comes with both, have a net payout (after all overhead expenses) range from 55% to 65%. Most breakaways utilizing the soft-landing, plug in approach, also can have net payouts (after paying outsourcing costs to other owner) of 55% to 65% (or better). This allows for making the same net payout without the time, overhead, and operational burdens the other owner carries.
- Breakaways can use the soft-landing approach as a transitional strategic structure or as a long-term efficiency strategy. You own your practice and can open your own office location and build out your own team when you have become more comfortable in the independent setting, platform and processes.
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