News and Commentary

What Happens when Financial Advisors Declare their Independence? by Eric Zeitlin

After spending more than 25 years in the financial services industry, first on the bond desk in Canada and more recently at one the world’s leading investment banking and wealth management firms, Rob Weiss, CFA, made a significant career move. In 2018, he went independent, joining Provenance Wealth Advisors (PWA) as a financial advisor and regional director in an effort to gain greater control of his business and the value he provides to clients. So far, it has been one of his savviest career moves.

According to research firm Cerulli Associates, Weiss is not alone in going the indie route. A growing number of advisors are breaking away from big-name Wall Street wirehouses and institutional banks, taking their clients and their clients’ assets with them, to join smaller independent broker/dealers and registered investment advisories associated with independent wealth management firms. In fact, independent firms are growing assets at a much faster rate than the wirehouses. One reason for this migration shift is the disenchantment many advisors feel with the escalating emphasis wirehouses place on sales quotas and profits, which they say, has ultimately reprioritized shareholder value over their fiduciary responsibilities and impaired the client experience.

“In the wirehouse model, advisors are trained to be salespeople and asset gatherers who bring in new business to improve their firm’s bottom line,” Weiss explained. “There’s little to no room for wealth managers to make rational business decisions and to engage directly in estate planning that helps clients clarify and achieve their unique short- and long-term goals.”

This overriding focus on firm profits diminishes the advisor’s role and removes any sense of an actual plan from the financial planning process. It impedes a wealth manager’s ability to build a book of business and cultivate lasting and beneficial client relationships that are critical to his or her success. After all, the advisor-client relationship is an intimate one based on a high level of trust and confidence that advisors must earn and continuously demonstrate to maintain over the long term.

When advisors join independent broker/dealers or registered investment advisories, they are relieved of the pressure to cross-sell banking products, such as mortgage loans, that clients may not necessarily need. Instead, they gain the freedom to create comprehensive plans tailored to each client’s unique needs and the flexibility to make decisions and take action based on their professional assessment of how a product or service fits within that plan. Moreover, breakaway advisors remove the overhead and multiple levels of management that come with big firms and typically slow down work processes and delay getting deals done. They can drive their own ship and manage their efficiency and productivity rather than being chained to the bureaucracy, demands and constraints that come with being employed by a behemoth brokerage firm.

“Going independent allows me to not only have more influence over the client experience, it also provides me with greater control over my business model, which is now more calibrated to an entrepreneurial environment,” Weiss said. “I set my own goals and standards, make hiring decisions and even control how I get paid.”

Yet, independence does not require advisors to start from scratch and invest thousands of dollars in trying to duplicate all of the support services, technology and research that the big firms can offer. Rather, independent broker/dealers and registered investment advisories provide all of these resources to their independent advisors, who can simply plug into their networks and be off and running in a matter of days.

One of the biggest challenges for wealth managers seeking to leave the hallowed halls off Wall Street firms is finding an independent broker/dealer or registered investment advisory whose culture, values and professional reputation meet their specific standards. In addition, there is a risk that some clients will not follow a financial advisor away from the name recognition and perceived prestige of a longstanding, traditional brokerage firm. According to Weiss, who took three years to find PWA, it was a calculated risk that was well worth the benefits it provides to him and his clients.

“At the end of the day, the greatest value I can provide my clients is beyond the scope of merely investing their assets,” Weiss explained. “Joining PWA allows me to have a voice in directing my business and provide clients with high-value estate planning that makes a direct impact on their financial positions and their personal and professional lives.”

About the Author: Eric P. Zeitlin is managing director of Provenance Wealth Advisors, an Independent Registered Investment Advisor affiliated with Berkowitz Pollack Brant Advisors and Accountants, and a registered representative with Raymond James Financial Services. For more information, call 800-737-8804 or email info@provwealth.com.

Provenance Wealth Advisors, 515 E. Las Olas Blvd., Ft. Lauderdale, FL 33301 (954) 712-8888.

Eric P. Zeitlin is a registered representative of and offers securities through Raymond James Financial Services, Inc., Member FINRA/SIPC.

Raymond James is not affiliated with and does not endorse the opinions or services of Berkowitz Pollack Brant Advisors and Accountants. PWA is not a registered broker/dealer and is independent of Raymond James Financial Services. Investment Advisory Services offered through Raymond James Financial Services Advisors, Inc., and Provenance Wealth Advisors. This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Any opinions are those of the advisors of PWA and not necessarily those of Raymond James. The information contained in this report does not purport to be a complete description of the developments referred to in this material. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete.

 


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