Advisors seek independence for a variety of reasons. The urge to break out on your own can happen to any advisor at any time. But if you were to ask RFG Advisors what drove them to this path, you’ll hear words like “I wanted to do what was best for my clients” or “I saw a better way to run a business” or “I craved the freedom to set my own business goals.” No matter what brought you to this moment, there’s also another reason advisors LOVE being independent: the financial upside.
With a lot of freedom comes much responsibility. Building a business and working to hit your milestones is something that not only fuels passion, it also moves the bottom line. But the financial uncertainty is one of the most common stressors amongst advisors weighing this decision. How can an advisor compare apples-to-apples with something such as a forgivable loan against the costs of independently running a firm?
At RFG, we have these discussions every day with advisors. Locating that “break-even-point” is potentially the hardest math an advisor will ever work through. As you assess various components of moving to an independent model, putting a price on some benefits can be really challenging. Is there a way to neutralize the personal bias and put together a thorough economic analysis on the real costs of ‘going independent?’
Meet the Independence Calculator – a calculator inspired by an Advisor who walked your same path that allows you to instantly see the cost-benefit analysis of owning their own business versus maintaining their current situation. Created by Kevin Harper – a current RFG Advisor – as he was going through the decision-making process himself, the calculator is a tried and tested tool for helping you make a confident decision. In fact, you can hear Kevin talk about the Independence Calculator and why he’s so happy he made the move to independence.
For advisors operating under a broker-dealer arrangement, a forgivable loan can really begin to erode your paycheck. Then think about the statistic that the average advisor transitioning to independence brings close to 90% of assets with them. Suddenly it sounds financially appealing – though still a leap of faith. That question of, “What percentage of revenue must I bring with me to cover my costs and essentially break even?” begins to come into a more tangible, digestible view. For many, the actual break even ends up closer to 40-50% of revenue.
Fear of the unknown or unmeasurable can prevent advisors from breaking out on their own. But if you ask other independent advisors if they would ever go back to life as it was before independence, you’ll hear a resounding “never!” Running a business on your terms, with an experienced team to your right, easily fuels healthy, organic growth. It also creates a happier life through flexibility and a life-first mentality. These are the positive elements that allow owners to steer their firm with passion and purpose, ultimately turning it into a financially successful enterprise.
If you’re curious about the economic upside of starting your own independent business, check out the RFG Advisory Independence Calculator.