Skill-Sets Wealth Management Experts Need Before Going Independent

When is the “Right” time to launch yourself as an independent wealth management expert – a common question I come across to while interacting with many registered investment advisors (RIA). My upfront answer to the question is “the time is right only when you want it to be right”. Just like preparing for any other professional role, the road may appear difficult initially. Some attributes that an advisor exhibit as a successful advisor at a larger organization may not always translate into the skill sets that are needed to run an independent business. The security of a job, the security of a steady income – all this may appear as a challenge. The move to independence can feel unpredictable and risky. But all I am saying is, it isn’t impossible to traverse these obstacles. All it takes is a fair bit of planning and modified skill-sets. There are some basic steps any advisor can take that can help make the transition go smoother.

Know your basics

Expertise and experience are basics that can ensure that you’re able to operate and grow your new business successfully. You need to be well versed with A-Z of operations know-how – be it account opening, assets transfer, place trades, etc. because you are going to be the all-in-all when you start your own. It also means learning to actually manage client relationships, which encompasses communicating effectively the nature of the advisory relationship, letting clients know what to expect, and setting boundaries.

Building relationships is the key

Now talking about clients, the most important factor when preparing to launch yourself as an independent advisor is to evaluate your relationship with your clients. Always remember, your clients have a relationship with you not with the firm. It’s how you have understood their needs all this while and guided them throughout. Make sure your clients are more than satisfied with your work and that your relationships are strong. Reinforcing these relationships through frequent client contact is the key. The stronger the relationship, the more likely it is that a satisfied client will follow you when you are starting your own. You can always grow your client base but to start off you need to bring existing clients with you.

Be prepared, financially

It’s the case with any start-up – never expect money to immediately roll in. As an independent firm, it could be quite a while before an advisor is able to match their previous income. The revenue is likely to decrease and the start-up cost is likely to increase. Which means it’s possible that you exhaust your savings. So you got to be prepared. Either have enough cash saved up to cover your living expenses for at a year (because that’s the tenure you are likely to take to figure things out) or have another additional income source in place. If either of it seems difficult, you can also look for taking out a bank loan or custodian who may offer financing to advisors through term notes. Either way, saving up at least a year’s income in an emergency fund is a good idea for advisors looking to go independent.

These days, many advisors are making the move toward independence and opening up their own advisory firms. And at some point one should. Reinforcing current client relationships, planning the finance front, and looking for ways to keep costs as low as possible are crucial factors to look into before thinking of going independent. For those ready to take the plunge, it’s totally worth it!