Are you a wirehouse advisor with more than 80% in managed money? If you fit this description then in the most simplistic terms you are an RIA operating within a wirehouse.
The NYSE is open 252 days a year. A $1MM revenue wirehouse advisor payout 45% = $450,000 annually. Compare to a $1MM revenue independent advisor net payout after expenses at about 65% = $650,000 annually. What’s The Difference Per Work Day? $800!
$800 per day is what it costs you to support a wirehouse model that you do not fully utilize or even require.
If you are using primarily managed money for your clients then you rarely use (or even need) the BD side of the balance sheet and yet you are paying $800 a day for it.
The wirehouse model is designed around an age old symbiotic relationship which many advisors no longer need – gone are the days of huge syndicate allocations, trading equities based on what your analyst said on the morning call, and taking down preferred offerings to work.
What an advisor no longer uses or needs is still necessary for a wirehouse to exist. You are paying for all those divisional managers, all the bankers, analysts, all the departments which support all those areas that have nothing to do with you or your business. You are even paying for those consultants, which tweak with your payout every year and produce those 26-page grid & compensation reports.
By going to an independent broker dealer or RIA you get to not only keep a lot more of your money but also receive the benefit of the significant valuation bump you get by owning your own practice
You are a financial advisor, financially advise yourself.
Give AdvisorBox a call whether to have us do an independent vs. wirehouse pro-forma for you and guide you through the options available. It doesn’t cost you anything to compare options and it could put $800 a day back into your pocket!
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