Broker Check

Financial Advisors: Big Opportunities Working with Small Firms

| October 23, 2019

It is difficult to deny that brand names are part of our culture. From toothpaste, to clothes, to cars, people are often label-conscious. Financial advisors considering a move to independence sometimes wrestle with brands as well, wondering how they can compete on their own against the brand recognition of large firms. But a careful comparison often reveals a simple truth: Working with small firms can offer clear advantages in compensation, culture, and client relationships that large firms often have great trouble matching.

A column recently posted on INVESTOPEDIA.COM summed it up this way: “These independent companies often provide a more comprehensive array of products and services than their larger competitors, along with a greater focus on relationships.” Independent Broker-Dealers like Cutter & Company, a Broker-Dealer and Registered Investment Advisor, provide a family culture, personalized support, custom solutions for clients and will even consider allowing a Financial Advisor to participate in outside activities.

  • Wider range of products: Independent advisors are not limited or incentivized to only sell products created or promoted by their firm.
  • Client relationships: Advisors at large firms often lose client-facing time as they attend mandatory meetings, or in pursuit of large production quotas. In our experience, Independent Advisors spend the majority of their time building meaningful client relationships and earning their client’s trust.
  • Outside activities: Independent firms may permit the addition of outside tax, accounting, estate planning, business succession or legal services which large firms typically do not. These additional services can provide a more holistic approach if the independent advisor chooses to offer them and be of great benefit to clients.
  • Support: Independent Broker-Dealers offer advisor support systems that can be highly personalized.
  • Compensation: Independents frequently earn more for the same business compared to large firm advisors.
  • Marketing: Independent firms market their own business without diluting the effect of that investment by than enhancing the brand of the large firm.
  • Future Value: Independents have significant freedom to build their business into a valuable enterprise. That includes the freedom to decide what happens to the value created – for example through a succession plan or sale of the enterprise – when they decide it is time to step away.

Ask yourself: What kind of business do you want to build? Experienced financial advisors who venture to independence often conclude these advantages outweigh the costs for things like business cards, letterhead, and office space that the large wire houses typically provide. Independent advisors are responsible for all aspect of their business, but do so with personalized support of firms like Cutter & Company.

Company Size Matters: Job Search for Financial Advisors, Investopedia