What it Means to be Truly Independent

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Independence is a nebulous concept that means something different to each of us. But a prevailing misconception is that independence means “going it alone.” The famous 16th century poet John Donne reminded us that “no man is an island; entire of itself,” and his words ring true to this day.

Independence can coexist with support. The financial services industry must accept that notion for the sake of the advisory profession.

Advisors have been vehemently encouraged to break away and stand on their own, defying a source of oppression (the wirehouse). While I support the parts of that narrative that are empowering to the advisor and that highlight the need for registered investment advisor (RIA) firms to better meet clients’ needs, I resent the subtext of this story that equates being independent with doing everything alone.

Think about what it means for an advisor, on their own, to be performing every necessary function of their business. That includes investment management to human resources, recruitment, back-office administration, marketing, compliance… are you exhausted yet? None of this considers the need for advisors to service their clients via in-person meetings, portfolio management and more. This isn’t what advisors are hearing when they set their sights on going independent; they’re being fed stories about their freedom and the promise of greener pastures. RIAs frequently find themselves straddling dual roles: business owner and client-facing advisor.

Going independent entails an immense amount of work that, depending on the size of the practice, can quickly become untenable. I’d like to offer an alternate vision for advisors to consider when pursuing the independent model.