For brokers, a successful transition to independence is contingent upon taking that decisive, entrepreneurial leap–a giant step away from the comforts of compliance departments, tech support, and company-supplied research and performance reports, and into an unsure world of overhead, partnerships, and client retention concerns.
As the number of breakaway brokers continues to rise, broker/dealers and custodians have implemented programs designed to make the broker's transition to independence as seamless as possible. Additionally, some custodians are reaching out to existing RIAs that are looking to grow by adding brokers as partners or buyers.
This month, Schwab Institutional issued its latest MKT report–"Recruiting Advisors Transitioning to Independence"–outlining some general principles for independent RIAs that are recruiting advisors transitioning to independence–or ATIs, in Schwab-speak.
According to research from Tiburon Strategic Advisors presented in the Schwab report, about 1,500 advisors are making the switch to independence each year. The report focuses on how RIAs can screen for successful ATIs; outlines the financial criteria for becoming an owner; and discusses management of the firm, creating silos, and ATI compensation. Information on obtaining a copy of the report can be found by hitting the Contact Me button at www.aboutschwabinstitutional.com.
In late March, Fidelity Investments' Registered Investment Advisor Group (FRIAG) launched an online planning tool that allows wirehouse brokers and independent B/D reps to map a customized plan for shifting their practices to an RIA model. Information on their model can be found at www.ria.fidelity.com.
