Independent Advisor or Ginormous Financial Firm?

Why should I use an Independent advisor instead of an advisor associated with a large firm? 

That is a question I hear a lot, and it is a very good one. As for an answer, it breaks down to one simple thing-the arsenal of tools and services available to an independent advisor is typically much larger than that provided an advisor at a huge firm. 

How do I know this? Prior to “going independent”, I worked as an advisor at three of the largest financial firms in the country. They were great places to work, and when I was there I felt pretty confident that I had all I needed to serve my clients. Of course, there were more than a handful of clients who always seemed to have a “hole” in their portfolio that my product set just really wouldn’t let me fill. I shrugged it off as just one of those things you learn to deal with and tried to plug the hole as best that I could. 

The biggest surprise to me when I went independent were the offerings I now had access to. Granted, some of them were pretty complex and required a good understanding of them before they could be recommended, but all of a sudden I was able to completely fill those holes in various portfolios. What was comical was the comment two of my clients made- “why didn’t we ever do this before?”  The answer was simple- “we didn’t have the services before”. 

I wondered why these huge firms I had worked at didn’t have these offerings available. Frankly, it did not make a lot of sense to me. I shared that thought with a representative of one of these new products, and her answer was enlightening. She told me that her company had been trying for years to get on the platforms of these huge firms, but were repeatedly shut out. The reason was due to the complexity of the products. As she explained it, the complexity of the product made it very difficult for the compliance department of these huge firms to sufficiently train and supervise the sale of these products-so they made a decision to simply not offer them. It made sense, as a company with 10,000 representatives nationwide will almost certainly have reps of various experience and skill sets.  And since protecting the company from legal actions, bad press and fines is the job of the compliance department, the decision was made accordingly to not expose them to the risks.  

Does that mean that independent firms don’t supervise their representatives very well? Absolutely not. Trust me, they do. But with 400 -500 reps across the country, most of which tend to have many years of experience as advisors, the job is just much easier. And my client are better off for it.