A financial advisor leaving to become independent broker

Navigating the Path to Independence: Exploring Different Models for Independent Advisors

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Katie Quick

Katie, a intregral part of Diversified Solutions for 15 years, is the Employee Relations Manager known as the "Queen of Help." Holding a BS from Hastings College, she seamlessly blends her academic background with real-life expertise. As a dedicated wife and mother, her family experiences lend her a unique perspective, enriching her professional interactions. An active community member, golfer, and handbell ringer, Katie's endeavors, guided by her mantra "Be Kind. Stay Humble. Work Hard," reflect a combination of industry acumen and genuine authenticity.
The world of independent advisory offers professionals an enticing opportunity to take charge of their own careers, build their brands, and provide personalized services to clients.

The world of independent advisory offers professionals an enticing opportunity to take charge of their own careers, build their brands, and provide personalized services to clients. However, the decision to go independent requires care and consideration of the options available that align with your goals and preferences. In this article, we will dig in to three distinct models for becoming an independent advisor: the W2 RIA model, the 1099+ model, and the equity model. Understanding these models will help you make an informed decision and pave the way for a successful transition into independence.


The W2 RIA Model

Joining a Registered Investment Advisor (RIA) as a W2 employee offers a unique balance between independence and support. In this model, you become an employee of an established RIA while still maintaining client ownership. The RIA provides you with essential resources such as office space, technology infrastructure, and a dedicated staff.  This enables you to hit the ground running.


Benefits of the W2 RIA Model:

  1. Immediate Infrastructure: By joining an RIA, you gain access to a fully equipped office, advanced technology, and a skilled support team.  You are able to focus on client relationships and advisory work. 
  2. Financial Security: As a W2 employee, you receive a predictable payout, reducing the financial risks associated with starting from scratch. 
  3. Established Reputation: Aligning with a reputable RIA lends credibility to your practice and enhances client trust.



  1. Limited Control: While you have independence in client relationships and advisory decisions, you may have less control over business operations and strategic direction. 
  2. Payout Structure: The RIA typically takes a percentage of your revenue as a payout, which may impact your overall earnings.


The 1099+ Model

The 1099+ model offers a unique proposition where a Broker Dealer or RIA sets up and covers the costs of your office space, technology infrastructure, and staff. In return, a portion of your ongoing payout is allocated to cover these expenses.


Benefits of the 1099+ Model

  1. Low Overhead: By leveraging the resources provided by the Broker Dealer or RIA, you can minimize upfront costs and focus on building your client base. 
  2. Supportive Environment: With a ready-made office and support staff, you can benefit from a collaborative environment and shared knowledge. 
  3. Flexibility: The 1099+ model allows you to maintain autonomy and control over your practice while benefiting from shared resources.



  1. Reduced Payout: As a trade-off for the infrastructure and support, a portion of your ongoing payout will be allocated to cover the costs.  This will most likely impact your overall earnings. 
  2. Dependency on the Provider: You must carefully evaluate the long-term viability and support provided by the Broker Dealer or RIA, as any changes or disruptions could affect your practice.


The Equity Model

The equity model offers a unique opportunity for ambitious advisors who are willing to trade their ownership in their client book for a stake in a larger organization – whether that is a Broker Dealer or an RIA. By becoming part of an entity, you can benefit from shared resources, economies of scale, and potential future growth.


Benefits of the Equity Model

  1. Growth Potential: By aligning with a larger organization, you can tap into their existing infrastructure, technology, and resources, enabling you to expand your business and serve a broader client base. 
  2. Long-Term Value: Trading book ownership for equity provides the opportunity to participate in the growth and success of the organization. This has the potential to increase your overall wealth. 
  3. Collaboration and Support: Joining a larger organization fosters collaboration with like-minded professionals, allowing you to learn from each other and benefit from shared expertise.



  1. Loss of Book Ownership: In the equity model, you will be relinquishing ownership of your client book in exchange for equity in the larger organization. This trade-off may limit your ability to retain direct control over client relationships and potentially impact client retention. 
  2. Integration Challenges: Joining a larger organization may require adjustments to your advisory process, technology systems, and cultural fit. It’s important to ensure that the values and approach of the organization align with your own. 

In addition to the three models discussed above, there are other avenues to independence worth mentioning:


Starting from Scratch: For entrepreneurial-minded individuals, starting your own independent advisory firm allows complete control over your business and client relationships. This approach requires significant upfront investment and careful planning but offers the potential for unlimited growth and freedom.


Joint Ventures and Partnerships: Collaborating with another advisor or forming a joint venture with an established firm can provide shared resources, expertise, and client networks. It’s crucial to establish clear agreements and ensure compatibility in goals and values.


Acquisition or Merger: Acquiring an existing practice or merging with another advisory firm can expedite your journey to independence by leveraging their client base, systems, and infrastructure. Careful due diligence and negotiation skills are essential to ensure a successful integration.


Franchise Model: Joining an independent advisory firm as a franchisee offers the advantages of a recognized brand, established systems, and marketing support. However, it’s crucial to review the franchise agreement and assess the alignment of values and culture.


Transitioning from an existing role: If you currently work as an advisor within a larger firm, it may be possible to transition to independence by moving your existing clients to your new practice. Consider legal considerations, non-compete agreements, and client communications in this process.

Becoming an independent advisor opens up exciting opportunities to shape your own destiny, provide personalized services to clients, and build a thriving practice. When considering which model to pursue, it’s crucial to align your decision with your long-term goals, personal preferences, and risk tolerance. Evaluate the level of independence, support, and financial considerations that each model offers. Take into account factors such as your existing client base, your desired level of control, and the value you place on shared resources versus autonomy.

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