8 Strategies for the Wishful Independent Financial Advisor
If you’re considering leaving a wirehouse or B/D, don’t do it the hard way! Instead, carefully plan your exit, taking into account everything involved to make your move in addition to starting and growing a business. Leaving your job before you are really ready will cause you added frustration and big changes are stressful enough!
Your business will have a greater chance of succeeding, independently, if your game plan includes adjusting your attitude, getting your dreams in order, and physically preparing for your new business before you hang that shingle. Many clients I’ve coached, long after they’ve gone independent, wished they had Victoria’s advice below before they got started!
Guest Post: By Victoria Bowen, Consultant for Financial Advisors in Transition
Perhaps you envisioned going independent, but, for whatever reason (stability and security, education and training, family and home life) you know you won’t be able to turn this goal into reality for some time. Don’t stress about this, as you might actually experience a more successful bid for independence in the future if you instead utilize this period as preparation. Just as a building–regardless of how great it looks or defines space–must be built on a solid foundation to be viable, so must your move to independence.
Here are eight things you can start doing now that will create the structural foundation for a smooth transition to an independent status.
1. Start thinking like a business owner.
When you decide to go independent you become a business owner. Now is the time to start thinking like one and building a business owner’s mindset and skill set. Should you actually choose to make the move from the wirehouse or brokerage to independence, you will need to become a business owner. Do you ever have moments where you think, “Well, if I were running things at the office, I’d do this…”?
Good! Keep thinking like this, and keep a tickler file where you make notes of good and poor business practices that you’ve experienced or observed. Keep in mind advising, this doesn’t translate into being a good business owner. These are two different skill sets, and the sooner you recognize this, the sooner you can start building up the skill set you don’t have. It is great to take systemic/structural examples from your current situation, but apply a critical thought process to aspects of the operation that would apply to a small business, where you may need to be the principal, assistant, accountant, and operations staff. A great book that delves into this concept is The E-Myth Revisited by Michael E. Gerber.
[Maria’s Note: Financial professionals can purchase versions of the Emyth specifically for financial advisors, accountants, and even managers. I would start ok, the Emyth Revisited
2. Practice “visioning”.
It might sound like some sort of new-age tactic, but studies show that envisioning what you want–like how your independent practice will look five years from now, what type of office you’ll have, what sorts of clients you’ll attract, etc.–will help you turn your vision into reality. This is because you’re more likely to “see” and keep in mind (even subconsciously) the steps you need to take in order to turn the vision into reality. This process will inform more concrete aspects of your transition, such as developing your business plan, as well as short- and long-term goals.
[Maria’s Note: Boy, I agree with this 200%. Listen to our Vivid Business Vision video and create the first draft of your vision statement as I walk you through the process. The link is under “Resources” in our navigation links.
3. Assess your business skills…and look for ways to develop the ones you don’t have.
You already come to the table with a set of skills. Some will be critical to owning your own business. But where do you get those other skills you need? For example, maybe you’re great with numbers, but you don’t have the slightest idea about marketing or writing sales letters. What should you do? Read up or sign up. Between and bookstore, you shouldn’t have any problem finding books that will help fill in the gaps.
Community colleges often offer classes or seminars with business themes. Your local Chamber of Commerce may hold workshops for first-time business owners, and SCORE’s small business counselors are also a great resource (and their services are free). Bottom line? Be mindful of your strengths and weaknesses–as both an advisor and future business owner. Don’t be afraid to check your ego at the door and have a trusted friend or peer help you with your evaluation. Constructive self-criticism can be restricted by what we are willing to admit and others may be able to provide clearer insight.
[Maria’s Note: Purchase the book Emyth Revisited Now, Discover Your Strengths” as a new book and you’ll be able to assess your top 5 strengths online using the unique code in the front cover. Or you can take the test online without buying the book.]
4. Save money.
There are various start-up costs and ongoing costs related to going independent. The prevailing rule of thumb is that you should have at least six months’ worth of savings to live on while you ramp up your business. Options such as office space are often dependent on your budget and having adequate savings will open up your search process. Given the current economy, saving will be a challenge, but it is important. Your savings will be your working capital and resources while you establish yourself and payments begin to filter in. If you can save eight or ten months’ worth, even better. Keep in mind that there may be some things you’ll need to start paying for right away, such as health insurance or COBRA. Having a “future business” nest egg not only makes sense, but may be crucial to alleviating pressures that can contribute to poor decision-making under stress.
[Maria’s Comments: Figure that it will cost you $10-15K to start a virtual business out of your home. More if you are going to rent office space and fill it with furniture.]
5. Discuss your desire for independence with your spouse.
You’ll need a support network, especially in the early months of your independent practice. If you discuss the idea sooner, rather than later, there will be more time for discussion, negotiation, and “buy-in”. Besides, no one likes surprises, and an informed spouse can be emotionally supportive, as they are then “invested” in the business.
[Maria’s Note: Approach your spouse with a plan for your new business, with details about how you will get from where you are to business owner. Be realistic about how this change will affect your finances and the length of time it will take you to build your business to the income level you’re enjoying today. Being prepared will garner more support than just sitting family members down for “the talk”.]
6. Continue to build solid relationships with your clients.
This is important, regardless of whether you choose to go independent or not. However, the more solid your client relationships are now, the more likely they’ll follow you if you choose to leave.
Upon becoming independent, a few things will happen. When you leave, your clients will be approached by advisors from your old firm. There are two things that they can do to keep the client. One is to critique the portfolio you have built for the client and the other is to try to befriend the client, and in effect, ‘out-schmooze’ you. You can defend yourself against each strategy, but only if you have been doing the right things all along. Ideally, each client should have had an in-depth portfolio review from you just before you resign, and any client who you feel needs to know you better as a person should have heard from you at a personal level a few times in advance.
But regular portfolio reviews and steady client bonding can’t be done all of a sudden and out of the blue just before you resign! A consistent, steady process of reviews and client bonding is fundamental to a successful practice, and is essential to a successful transfer to your new firm.
7. Avoid building your business around proprietary products and do your homework.
Once you leave your current firm, those products that you’ve gotten to know so well won’t be yours to sell. Instead, focus on “portable” products you believe in that you will be able to represent, regardless of where you end up. Take the time to research other products that you feel good about and complement each other in the markets you work in. Even if you choose not to use them, your deeper understanding will allow you to help your clients make informed decisions, which bolsters the value of your services.
8. Understand what you don’t AND do like about your current situation.
Just because there are certain things you don’t like about your current employment doesn’t mean that your only alternative is to go independent. It could just mean you’re at the wrong firm. Understanding what you like and don’t like about your current firm (go ahead, make a list!) will help you differentiate between a firm that’s making you unhappy or a business model (i.e., you being an employee instead of a business owner) that’s making you unhappy. Also, as an independent you will be able to create your own model and processes, but you can still use those things that work in your current situation.
Remember, starting and running your own independent practice is a long-term process. Building a strong and secure foundation involves considerable physical and mental preparation. The same is true for your future practice. Put the time in now, and experience a smoother transition to independence later.
©2014 By guest blogger, Victoria Bowen, the founder of Going Indie. Since 2007, Going Indie has been helping advisors considering leaving a wirehouse or captive firm by providing online resources and 1:1 consultations. Victoria is a consultant, recruiter, and former marketer who provides the “personal involvement” that helps breakaway brokers make informed decisions and is available for additional advice once they’ve made the move. Visit Going Indie at www.GoingIndie.com or on Twitter @GoingIndie
Links on this page were updated 3/22/18
About The Author
An irrepressible entrepreneur, Maria Marsala sold AVON at age 14 and landed on Wall Street three years later. She became a bond trader when female executives were as rare as pink diamonds. For 25 years, Maria streamlined Fortune 500 companies, nurtured non-profits, and discovered her niche—mentoring women CEOs and executives. Armed with corporate secrets and life coach credentials, Maria founded Elevating Your Business to help female financial professionals live better using her proprietary brand of consultative-coaching. Contact Maria today and take the first step toward freedom, full-fillment, and a sparkling quality of life! Contact me now!
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