a man is happy at his independent financial advisor desk

Many seasoned professionals who have spent years working for wirehouse firms are contemplating a significant career shift—moving from the confines of a large, established institution to the independence of running their own practice. There are several compelling reasons and numerous advantages for financial advisors to consider leaving the wirehouse and going independent.

The Main Differences Between Wirehouse and Independent Financial Advisor Practices

The distinction between wirehouse and independent financial advisor practices lies primarily in the level of autonomy afforded to advisors in how they run their business and how they serve their clients. Wirehouse firms are large, established financial institutions with a centralized structure. Advisors working for wirehouses operate within a predefined framework, often adhering to corporate guidelines, product offerings, pay structures, and branding. In contrast, independent financial advisors operate autonomously, running their practices without the constraints of a corporate umbrella, untethered by mandates and quotas, and able to choose the best course for their practice and their clients.

One significant difference is the revenue model. Wirehouse advisors typically receive a salary and bonuses, with a portion of their compensation tied to the products they sell. Independent advisors, on the other hand, own their revenue stream, which puts their earning potential in their control.  Advisors who own their businesses are also building personal legacies that they can monetize on their terms. 

When it comes to serving clients, independence also allows advisors to offer a broader range of financial products and services, with the ability to tailor solutions to client needs without the limitations imposed by a wirehouse’s proprietary products. Additionally, by owning their own practice, advisors have the flexibility to choose among cutting-edge technologies and innovate in response to market trends, enhancing their ability to provide personalized, efficient service.

While wirehouses offer stability and brand recognition, independent advisors enjoy greater flexibility, increased earning potential, and the opportunity to build their own brand, fostering a client-centric approach that distinguishes them in a competitive landscape. 

Let’s examine these 5 benefits in more detail:

Benefit #1: Greater Autonomy Over Business Decisions

The primary allure of transitioning from a wirehouse to independence is the newfound autonomy. Independent advisors gain greater control over business decisions, from setting their schedules to making strategic choices without corporate constraints. 

This autonomy allows for:

  • A more personalized client experience
  • The ability to tailor financial solutions to suit each client’s unique needs
  • The freedom to differentiate their practice to serve their targeted clientele

The shift empowers advisors to align their practice with personal values and client-centric approaches, fostering a sense of ownership and satisfaction that comes with steering their business independently.

Benefit #2: Tailor Services to Clients’ Unique Needs

Transitioning from a wirehouse to an independent advisor empowers professionals to tailor financial services directly to clients’ unique needs. Freed from the limitations of wirehouse product offerings, independents can craft bespoke solutions, providing clients with a more personalized and flexible approach to wealth management. 

This benefit enhances the advisor-client relationship, allowing for a deeper understanding of individual financial goals and preferences. Independent advisors can adapt their service model to cater specifically to diverse client needs, fostering a stronger connection and potentially leading to increased client satisfaction and loyalty.

Benefit #3: Increased Flexibility

Shifting from a wirehouse to becoming an independent advisor introduces a significant benefit—increased flexibility. Independent advisors have the freedom to set their own schedules, work environments, and business strategies. This flexibility enables them to respond swiftly to market changes, client demands, and personal priorities. 

Unlike the structured environment of a wirehouse, independents can adapt quickly to emerging opportunities and tailor their approach to best suit the evolving financial landscape. This agility not only enhances work-life balance but also allows advisors to make nimble decisions, fostering a dynamic and responsive business model that aligns more closely with their unique vision and goals.

Benefit #4: Higher Earning Potential

Embarking on the journey from a wirehouse to independence unlocks a compelling advantage—higher earning potential. Independent advisors often experience a more direct correlation between their efforts and income, as they operate within a revenue-sharing model that can be more lucrative than the fixed structures prevalent in wirehouses. By shedding certain overhead costs associated with larger institutions and a pay grid that puts the institution first, not the advisor, independents can maximize their earnings. 

This financial flexibility not only rewards their entrepreneurial spirit but also offers the potential for increased income as advisors retain a larger share of the revenue generated. The shift to independence presents a pathway for financial professionals to reap the rewards of their hard work and successful client engagements, creating a direct link between performance and financial success.

Benefit #5: Stronger Client Relationships

Transitioning from a wirehouse to an independent advisory model yields a transformative benefit— the ability to build stronger client relationships. Independent advisors, free from the constraints of corporate agendas, can prioritize personalized client interactions. With a focus on individualized financial solutions, independents can foster deeper connections with clients. This client-centric approach leads to enhanced trust, loyalty, and satisfaction. 

By tailoring services to meet unique needs and offering a more hands-on, personalized experience, independent advisors can create lasting relationships and deliver even more value to their clients. The shift to independence allows advisors to truly understand and cater to the distinct financial goals and preferences of each client, ultimately strengthening the advisor-client bond.

Bonus: The Secret to Having More Time for Your Clients

Contrary to common misconceptions, the transition to independence doesn’t necessarily mean overwhelming responsibilities in startup and practice management. The secret to unlocking more time for meaningful client interactions lies in debunking the perceived role advisors play as independent business owners.

Startup and Practice Management Demystified

Contrary to the assumption that independence equates to being bogged down by startup intricacies and practice management, the reality is more manageable. Setting up an independent practice involves clear, achievable steps. 

Launching a new business can feel overwhelming, to the point it can even hinder or delay an advisor’s decision to pursue the freedom and control over their business that independence affords. The supported independence model clears those hurdles, providing support every step of the way, from transition and business start-up through day-to-day operational management of the business. 

Advisors gain a clear path by having hands-on, dedicated support throughout the pre-transition and onboarding experience, from legal consultation, office build-out, account opening, and administrative support, to creating your new brand and building your website.   

The supported independence model mitigates the burdens of practice management as well. Advisors can outsource administrative and operational tasks to professionals aligned with your goals and committed to delivering a superior client experience, helping advisors focus on more impactful ways to serve the business. 

Strategic Outsourcing Strategies

Navigating the complexities of entrepreneurship doesn’t mean shouldering every responsibility alone. Strategic outsourcing is a powerful tool for advisors to operate efficient, client-focused, growth-empowered practices. From administrative functions to technology management and compliance, advisors are able to delegate non-revenue-generating tasks and specialized roles – effectively. 

By outsourcing these aspects, advisors optimize their time, allowing them to maintain a client-centric focus while expertly managing their practices.

When It’s Time to Leave the Wirehouse

Good Life can support your transition from the wirehouse to an independent operation every step of the way. 

Learn more about what it means to be a Good Life advisor here.

Frequently Asked Questions

What are the downsides of working at a wirehouse?

Working at a wirehouse may involve downsides such as limited autonomy,  a lack of choice and a focus on proprietary products, a structured and restrictive corporate environment, a fixed salary structure with less direct control over earnings and the type of clients you can serve, and the inability to monetize the value of your business. 

Do independent financial advisors earn more than wirehouse FAs?

Independent financial advisors retain a larger share of the revenue they generate and have the autonomy to control their costs and expenses. That autonomy creates a path for them to earn and retain a higher percentage of generated revenue.

How to transition to independence from wirehouse for FAs?

To transition from a wirehouse to independence, the supported independence model can eliminate many of the hurdles and pain points by offering dedicated support, providing transparency into the process, and working side by side with advisors at each step. Steps along the way include creating a personalized transition plan, technology training,  product mapping, and business start-up support such as legal consultation, branding, web design, and office setup.