Why Do Advisors Leave The Wirehouse Model For The RIA Model?

We often hear about “breakaway” advisors. That is commonly understood to refer to wirehouse advisors “breaking away” to setup their own independent practices. It’s one of the main reasons the RIA channel has been, and continues to be, the fastest growing channel in the industry. But why do we never hear about independent advisors going in the other direction to the wirehouse model? Why does the river only run in one direction? In this episode of the Transition To RIA question & answer series I explain: Why the current trend was not always the case. What caused the trend to now occur (for a decade plus now.) What the main motivators are for wirehouse advisors to make the change. I'm Brad Wales with Transition To RIA (TransitionToRIA.com). This is episode #137 of my question and answer series where I answer RIA related questions I get from advisors just like you. What I do: At Transition To RIA I help financial advisors and teams between $50M and $1B understand everything there is to know about WHY and HOW to transition their practice to the Registered Investment Advisor (RIA) model. RESOURCES & LINKS ___________________________________________ 🔹 Website: https://TransitionToRIA.com/ 🔹 Show notes: https://TransitionToRIA.com/why-do-ad... 🔹 Contact me: https://transitiontoria.com/contact/ 🔹 List of all questions I've answered: https://transitiontoria.com/videos/ 🔹 Podcast: https://transitiontoria.com/podcast/ 🔹 Whitepaper ("11 Ways The Economics Of The RIA Model Are Superior To Other Advisor Affiliation Options"): https://transitiontoria.com/whitepapers/ 🔹 Transcription of video: Why do advisors leave the wirehouse model for the RIA model? That is today's question on the Transition To RIA question and answer series. It is episode #137. Hi, I'm Brad Wales with Transition To RIA where we help you understand everything there is to know about why and how to transition your practice to the RIA model. If you're not already there, head to TransitionToRIA.com where you’ll find all the resources we make available from this entire series in video format, podcast format. There are articles, there are whitepapers. All kinds of resources to help you better understand the model. Again, TransitionToRIA.com. On today's episode we're going to talk about what motivates advisors to leave the wirehouse model and transition their practice to the RIA model. There was a time this was not the trend. And spoiler, it is the trend now, and has been for several years now. If you look at industry stats of advisors changing affiliation options, that river only runs in one direction. It leads to more and more independence. There are not advisors at RIAs that are going to the wirehouse world. It only goes in one direction. And you should ask yourself why that is. We're going to talk about some of those motivations on this episode. There was a time though that the movement to the RIA model from the wirehouse model was not a trend. And there were a few (now outdated) reasons for that. First, there was a time where there was a lot of faith in the proverbial firm name on the side of the building. There was a belief that clients only wanted to work with a financial advisor that was at this big name wirehouse firm. That has since shifted tremendously. In large part because of the damage that was done during the ‘07, ‘08, ‘09 crash where the reputation of some of these firms was heavily damaged. No longer is there that ironclad reverence that went to those named firms, and for clients it is no longer essentially a must have. And it's taken a while for advisors of all stripes to accept that fact, particularly some that have been around a very long time, that lived in the time where it did have much more credence to it. But those times have changed. Another example is there was a time the wirehouses had better technology than the RIA model. That is now entirely opposite. It costs money to create, maintain and update technology solutions. There was a time that the wirehouses had a bit of a monopoly, if you will, on a larger user base. A wirehouse firm typically had 10,000+ advisors to spread the cost of that technology across. Whereas at the time, in the RIA space, any of the then tech providers supporting the RIA space had nowhere near that many users. Hence they couldn't as easily reinvest back into their offering and be competitive. And so that was an advantage the wirehouses had. That has now 100% flipped. There are now tech tools supporting the RIA model that have far more advisor customers than any one wirehouse has advisors as customers. And so if anything, again, it's 180 degrees different now. Con't... View remainder of transcription here: https://TransitionToRIA.com/why-do-ad... Disclaimer: https://transitiontoria.com/terms/