For decades, wirehouses and broker dealers have been the dominant home for financial advisors, accounting for over half of assets under management by third parties. But more and more advisors are beginning to recognize the benefits of a different structure: RIAs. In fact, the number of Registered Investment Advisors has doubled since 2000 — and the trend shows no sign of stopping.
According to an analysis from Cerulli, RIAs will account for more than 31 percent of third-party assets under management by 2027, up from 26 percent today. Wirehouses, on the other hand, are projected to see a drop of nearly six percentage points.
What’s driving so many advisors to make the leap toward independence? It’s more than just the bottom line.
The economic benefits of independence
Many of today’s advisors seem to intuitively understand that independence is better for them: According to Cerulli, nearly a third of independent broker-dealer advisors have considered opening an RIA in the past year.
It’s easy to understand why. Advisors who go independent are free from the percentage payouts of the grid system. There’s only one number that matters for an RIA: 100%. That’s the amount that you get to keep from the revenue you generate.
The appeal of RIAs goes well beyond increased income and earnings. Unlike in a broker dealer or a wirehouse, you own your business as an RIA. You’re building something that goes beyond income — a transferrable asset, and one that could eventually fetch significant exit values when it comes time for succession.
Run your business the way you want
As an RIA, you gain the flexibility to run your business on your terms. You craft your own brand; you determine your strategy; you create your corporate culture. Gone are the days of following an approach that you only partially believe in. It makes success all the more sweet.
Community, freedom, and happiness
Going independent is liberating, but it can also sound scary. Many advisors end up asking themselves the question: Does that mean I’ll be completely on my own?
Broker dealers might want you to think that, but it couldn’t be further from the truth. By joining an independent RIA, advisors become part of a community of advisors, one that offers support from transition assistance to marketing and branding services to industry-leading technology that allows you to best serve your clients according to your own expertise.
Most of all, the right RIA partnership leads to freedom. Freedom from filling quotas. Freedom to run your practice the way you want, and to truly build portfolios according to your own expertise.
And what does freedom and support lead to? Happiness. Advisors shouldn’t feel trapped by a broker dealer, they should feel empowered by their structure, and confident that the with the right partnership, they have the support to allow them to thrive
Ready to start your next chapter? Contact us to learn more about life as an advisor with Legacy Private Wealth Partners.
