Financial advisors pondering the future have myriad items to consider. One hesitation about making a move from a large wirehouse firm to setting up an independent practice is the question about all the “in-house” support they would be leaving behind. At the top of the list might be: Who is going to handle trades and transactions for clients?
The root of that concern probably lies in the definition of ‘wirehouse’, which takes its meaning from before the era of wireless communications, when telegraph wires and telephone lines connected brokers to the main office to get stock quotes and market news for their clients. INVESTOPIA writes that “Most present-day wirehouses are full-service brokerages that provide the complete range of services to clients.”
However, the reality is that independent financial advisors can have it both ways: The ability to run their own business to maximize their client’s interests with all the resources to which they have grown accustomed working for a large firm. Cutter & Company, a Registered Broker-Dealer and Investment Advisor, has had a strategic clearing relationship for nearly 20 years with a wirehouse custodian. The relationship provides total confidence that trades get executed promptly and accurately for our independent financial advisors. The details can be found at the Clearing Partners section on our web site. This relationship provides access to the products, research tools and resources necessary to run an independent practice efficiently and develop customized client solutions.
These kinds of resources, in combination with a business model that allows independent advisors greater flexibility in serving their clients than they could provide under the auspices of a large corporate structure, help explain fundamental changes in the industry. ON WALL STREET recently reported research from Cerulli Associates indicating a 6.2 percent increase in assets managed by Registered Investment Advisors last year, well ahead of the average growth of 0.9 percent across all channels considered. By comparison assets managed by wirehouses shrank by 1.9 percent, the worst-performing model that Cerulli Associates studied.
The same article posed the fundamental question in its headline: “Is the transition to independence worth it?” The list of compelling arguments is lengthy. If you wish to discuss some of them in greater detail, don’t hesitate to contact Cutter & Company directly.