Four Keys to Transition from Wirehouse to RIA
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There’s been an uptick in the number of advisors leaving wirehouses for broker-dealers and registered investment advisors in recent years. According to Cerulli, RIAs have grown as they continue to secure market share from wirehouses. In fact, for the first time the market share for managed accounts held by wirehouses dropped to below 50% in 2017, from a high of 71% in 2001.
That said, breaking into the RIA channel comes with its own set of challenges. By going independent, advisors must tackle back-office bureaucracy and client onboarding procedures that were previously managed by the wirehouse. These activities can often be time consuming and distract from important client-facing activities. Moreover, advisors may become overwhelmed with the scope of services they’re now able to provide.
For advisors making the big move – or for those just considering it – here are four tips for a smoother transition:
1. Choose your brand
Once advisors strike out on their own, it can be tempting to be all things to all people. That can be a big mistake. I’ve seen many advisors stumble out of the gate by not clearly communicating which services they offer.
For example, will you offer estate planning? How about tax prep or portfolio management? Can clients buy individual stocks from you, or do you take a straight fee for investment advisory services?
Although your service offerings may evolve over time, it’s important to be consistent with your messaging early on. That not only avoids the risk of disappointing clients by taking on more than you can handle, but also allows you to establish a niche.