In the ever-evolving landscape of wealth management, financial advisors are constantly seeking ways to grow their business, increase payout and enhance the value of their business—all while protecting their client relationships, adhering to regulations and leveraging important technologies and capabilities. On top of all that, advisors also want control over their practices, opportunities to make business decisions and the ability to monetize their hard work. It’s certainly a tall order.
This “I deserve to have it all” sentiment has led to a shift of more advisors moving to independence. In fact, independent channel market share is expected to reach 42% by 2028, up from 34% in 2018, and nearly 70% of all advisors say they would prefer to be affiliated with an independent firm if they were to switch firms. (According to Cerulli’s 2024 BC Marketplace Report and LPL calculations of Cerulli Retail Investor Advice Relationships 2023.)
It’s no secret that advisors often turn to independence for payouts that can reach up to 100% and more control over their book of business, value proposition and legacy. With independence, advisors can set their own vision and growth goals while setting the tone for their firm’s culture and client experience. In fact, at one end of the independence spectrum, advisors are responsible for selecting, securing and building out their real estate, designing the new brand, creating their tech stack, taking on risk and compliance, securing insurance for their business and providing options for employees and ultimately managing a bevy of third-party vendors or managing an ever-expanding in-office staff.
For some, this freedom to build and control every aspect of their business and ownership feels like what they were always meant to do. For many others, this ever-growing list of responsibilities can become overwhelming.
The Rise of “Supported” Independence
In my role, I’m often asked, “What are my options when I know I want more control, but the thought of doing it all myself has me feeling stuck?” It’s a great question, and it gets right to the heart of this shift in the definition of independence.
This desire to find an alternative path is fueling advisor interest in supported independence—a suborder of options backed by larger firms that provide various levels of mid- to back-office support such as compliance, technology, marketing and more to independent advisors and firms.
Supported independence is not just a trend; it’s a strategic shift powered by advisors who are redefining what it means to chart your own path in the wealth management industry. Supported independence can take many forms, including:
- Independence with foundational support: Advisors who want the benefits of a platform that brings together core operations, service, technology, investments and trading with the option of adding support when and where they need it.
- Independence with a network for support: Advisors who value being an owner and operator but seek a guided journey and are eager to join a community to share best practices.
- Independence with customized support: Advisors looking for tailored guidance, hands-on execution and premium support to help optimize their time and advance their business.
- Independence as an employee: Advisors on this path seek independence without the burdens of running a business. This unique relationship gives advisors the ability to outsource things like real estate, technology, administration and operations support, benefits and payroll. This flavor of independence gives advisors all the benefits of independence, including book ownership, while letting them leverage the benefits of W2 employment.
As the industry expands to address the increasingly varied needs of the independence movement, a whole new segment of advisors can visualize their independent future.
How to Make it Happen
No two entrepreneurs’ visions are the same, and fortunately, the range of options has evolved to meet the different needs of advisors. A great way to begin the due diligence process is by asking yourself what elements of business ownership excite you, worry you or make you think, “I would rather be doing anything else.” Using this list to vet your options allows you to focus your energy on the offering that checks all the key boxes.
Here are some areas I encourage you to focus on as you embark on your due diligence quest:
Risk Management: If the past few years are any indication, regulations will continue to evolve in scope and complexity, and market volatility will continue to take investors for a ride. This may have you asking yourself if becoming your firm’s chief compliance officer and taking on the risk of starting an RIA will be too much on day one. If this is the case, look for a partner that can help mitigate risks associated with compliance, legal issues and market volatility.
Efficiency and Scalability: Growth-minded advisors are often seeking the backing of a larger firm to help them scale their practice with less risk through access to additional capital and resources. Different independence models can offer different levels of liquidity and capital, so spend some time matching your business growth goals to what’s available. In addition, supported independence options often come with access to technology meant to improve efficiency and service delivery, which can be a significant advantage in a competitive market.
Work-Life Balance: Work-life balance is increasingly important to advisors, particularly the younger generations. Having this balance can be a benefit for current advisors and a strong recruiting tool for growth.When evaluating a change, think past the transition and ask yourself whether you can picture your work-life balance truly working for you or whether you would benefit from the administrative and operational support of supported independence.
Defining Your Next Chapter
How you choose to evolve your business is a personal decision, and no two advisors are the same. The most successful advisors track the evolution of the industry and align business opportunities with their desired level of entrepreneurial independence, which might change at different stages of life and business.
That’s why your chosen partner should have the ability to guide you through your entire business lifecycle, from startup resources to growth mode to succession planning and the ultimate sale of your business. There is tremendous power in waking up every day knowing you have the power of choice and the right partner in your corner.
Kimberly Sanders is Senior Vice President, Supported Independence, at LPL
