Implications for Advisers - Business Management for Financial Advisers

Any one of the four platforms is an choice for an individual advisor. Some times being a local representative of a national brand is an effective way to attract clients.

The regulated local autonomy model is an good platform for those looking for best characteristics of a wire house or general agency cocoon. Payouts are very high in this system. The reason is that the most independent brokers doesn’t afford to much infrastructure but still sustain their high payouts.

The supervised independence model is the most appealing one ti independent advisors. Payouts for an independent broker-dealer generally range between 65 and 90 percent and average 85 percent. This platform tends to impose fewer controls on its advisers, but in fact it only works for advisers who are emotionally and managerially ready to grow their own businesses without a safety net. It is also a good option for those who have expanded their fee based business.

The total independence model provides flexibility for advisors who operate in fee-only market. If they’re effective in managing their practices, comfortable asking for appropriate fees, and willing to take full responsibility for their own compliance supervision, this model is very compelling. The risk is that advisers using this platform are walking a tightrope without a net. They need to be much more effective business managers, and they must appreciate that the level of support simply is not going to be as great as it is in the other three platforms.


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