So much ink has been spilled on the question of whether a financial advisor should go independent, so much jawboning by recruiters trying to convince advisors about the merits of doing so.
In both cases, most of the emphasis is on the benefits of making a move, especially the financial benefits (i.e., higher payouts) as well as business models offering increased freedom and A to Z support in technology, products, research, marketing, business coaching and more.
With all those benefits, the number of wirehouse advisors should now be approaching zero. Yet year after year, it is only a relatively small proportion of advisors who make the move.
And, assuming for argument's sake that such a move is generally advantageous, the reason for the reluctance should not be hard to understand. Change is very difficult.
As Ellen Uzelac's June cover story illustrates, the move to independence is experienced by the advisor more as a "leap of faith" than as an arithmetic response to a cost-benefit analysis.
Strategist Barnaby Riedel, who has experience designing a broker-dealer recruiting campaign, says of those who have made the move: "Advisors measure success not in terms of what they got but in terms of how these costs were mitigated. How many clients did they actually keep? How long before they were back up and running?"
So waving back-of-the-envelope calculations estimating how much more an advisor could take home is not likely to persuade an advisor terrified about losing key clients or making payroll during rough patches. Even if convinced the move will be profitable, concerns about how a move would affect one's family might loom larger than a more generous payout.
