Whether you are starting as an independent advisor or contemplating going independent or thinking about what that next phase of growth means to you, it is essential to start with the end in mind. So, let's talk about how you want the journey to look as you make your first series of moves which can be the most daunting.

Some of the decisions you make on day one can sometimes be difficult to unwind down the road. It would help if you thought of the move in two phases.

When you launch, the first phase should focus on the existing clients and getting them to move with you to the new firm. Make sure you review the contract you may have signed with the firm you are leaving and acknowledge if the firm is a ‘protocol firm’. How you approach clients is very different with protocol versus non-protocol firms.

When thinking about the messaging to clients, it should emphasize consistency. You want clients to know your fees are not increasing and that the team has moved with you. When an advisor moves, the clients typically see that technology will be better, their client experience will be enhanced, and there will be more investment options with no proprietary products.

The metric for success during the first phase is determined by what percentage of existing clients signed on the dotted line and transitioned.

In the second phase, three to six months after you've launched the firm, you can take a quick breath. By this time, the transition of existing clients is complete. Now you can focus on the net new assets and the excitement that comes from finally being able to run the business as you've always wanted to. The metric for success in the second phase is about signing new clients to the firm. Once transitioned, every advisor will tell you, "I wish I had done this sooner."

So, what about firms that are not launching but merging or acquiring a business of their own? You have to think about things differently than advisors who fully break away independently.

With mergers, in terms of integration, after the merger is complete, part of the success metric is still measured in how many clients join the new firm. The economics are predicated on the majority, if not all of the assets, coming to the newly merged firm.

Like the breakaway advisor, the seller needs to have a compelling story beyond I took a big check to come here. Typically, some of the same benefits apply – access to more investments and services that the seller didn't have access to before the merger and improved technology available to the clients. All of these things will also help service the clients more efficiently.

This leads us to another metric beyond the AUM that is important, and that's process improvements. For both the buyer and the seller, once the merger is complete, buyers take the opportunity to review how the seller conducts their business.

Maybe the seller has a unique financial planning process that the buyer can adopt, or perhaps the performance reporting process of the buyer is what the new firm will adopt. The seller may have a more efficient billing process, getting everyone paid faster every quarter. Beyond the AUM levels, we're seeing buyers and sellers basing the success of their mergers on process improvements and the ease of doing business post-merger.

When talking about growth, you consider the initial phase of going independent. Then, how to achieve rapid and stabilized growth and scale. You need to grow first, and then; you achieve scale. Advisors should think with the end in mind, whether the event is an exit, acquisition, merger, or recapitalization.

Think about each of the phases and what it means to you. Each stage has unique challenges, but advisors need to understand the end objective to help guide them to make the right decisions early on.

In the first phase, we think about going independent. It's about stabilization and minimizing fallout from the transition. The second phase is about rapid growth and finding the right strategic relationships to help support the growth of your business.

Let's think about the third phase—achieving scale through outsourcing pieces of the business that are not a core competency. Excess working capital should be invested into the business areas that focus on your core competencies now that you've outsourced the rest.

Advisors need to keep an eye on the margins. A few years ago, everyone was concerned about fee compression caused by Robo advisors and ETFs in the investment management side of our business. As a result, some advisors have reframed their value proposition, adding more services to their offerings.

Advisors are searching for ways to ensure that they're meeting the needs of their existing and prospective clients. Some added services include in-house CPAs and clerical associates handling bills for clients, but these expanded services mean you may need to add staff and possibly technology. Because of the additional services, fees have remained stable and were not compressed, but expense levels have gone up. The firm is acquiring more clients because of the addition of services, but you need to keep an eye on the margins.

Advisors are being asked to do more for less. You must be good at resource optimization and allocation. Focus on what you do best and outsource the rest. Outsourcing is the solution for doing more with less, not staffing up, and avoiding investment in more technology.

Investment management is where a big chunk of time goes, so outsourcing this function can help you grow and scale. If you choose the right outsourcing relationships, you can maintain or improve your margins and improve client deliverables.

To circle back, start with the end in mind—whether that is retirement, merger, or acquisition as part of an exit or succession plan. Be mindful of your margins, the number of employees you hire, or new technology that is put into place that may not have been necessary if you outsourced those functions. Keep your focus on growth, scalability, and increasing the client experience.

C24-20917 | EXP 2/28/2026