Broker Check

Reality Check: Going Independent

| August 29, 2016

There are countless articles circulating about all the advantages of going “independent”. Most cover important points to ponder, including the potential impact on your quality of life as a financial advisor.

In my mind though, the main reason for considering an independent relationship with a broker-dealer and/or investment advisory firm is because you are being held back from doing what you consider to be the ‘best thing’ for your clients. Maybe the ‘best thing’ has absolutely nothing to do with products you are required by the firm you currently work for to cross-sell. Or perhaps your firm limits access to only products that pay the firm special compensation when other, more attractive options would be best.’

Smaller independent firms are not known to restrict the products you’re able to sell, nor do they typically create their own ‘in house’ products. At our firm, we do not have proprietary products. We also do not have special revenue sharing arrangements with mutual funds or other financial products*. Product sponsors can create a financial incentive to promote one product over another. Not because it is the best product; but because the firm gets paid more to sell it.

Does your firm’s compensation grid have unrealistic parameters that make you feel forced to produce ‘no matter what it takes’ just to retain your current payout percentage?

Has some of your workday been taken from you to attend firm-required meetings? Or do you experience other corporate demands that require the use of your precious time – time that could be better spent interacting with existing clients or identifying new ones?

Do you have a simple marketing idea you want approved by compliance? Is it the kind of piece that is time sensitive and has been pending approval in the compliance department for weeks? Horror stories of other firm’s compliance department turnaround times are not uncommon. I’ve heard how other firms can take days, weeks and even as long as months to review a submission, only to be sent back in skeletal form like some sort of flesh eating bacteria got hold of the body of your idea.

I can’t speak for all independent firms out there, but at Cutter & Company, I can’t remember the last time a request for compliance approval of a marketing piece took more than 48 hours. When you work at an independent firm, you manage your own schedule. The independent broker-dealer’s job is to help you when you ask for help. We focus on being your support system behind the scenes. Sharing ideas about new products, supporting you with compliance oversight and practice management tips, and providing education on topics you’ve expressed interest in. Essentially we help create and grow the firm you envision. That leaves you with the time to focus your efforts on your clients.

If you’re being held back from doing what is best for your clients, it may be time to seriously consider your options as an independent advisor.

*Cutter & Company only participates in revenue sharing as it relates to brokerage account money market/FDIC bank deposit funds, which include sweep features for trade activities not available in other similar funds.