Most people think an investment advisor is a person, but it's usually a business entity. I joined the investing world in 2018, and my official title was "investment advisor representative." To the average person, this sounds like an assistant role. In reality, it's just a legal way of saying I work for and represent a legal entity, aka the "investment advisor." Like my firm, Paladin Wealth Management is technically the Registered Investment Advisor.
I decided to take down my top 20 reasons for leaving the broker and going independent. I hope you'll agree and understand this move wasn't just for me. It was for my people. I wanted more for the people I serve, and when I couldn't find it in the marketplace, I decided to create it.
Independence and control: Independent financial planners have greater autonomy over their investment strategies and can offer more personalized services to their clients.
Fiduciary responsibility: Registered investment advisors are held to a higher standard known as the "Fiduciary standard," meaning they must act in their client's best interests, while broker-dealers must only make suitable recommendations. This may sound redundant, but a significant difference exists between what is genuinely suitable and what is simple right for a client on paper.
Flexibility: Independent advisors have greater flexibility in choosing the tools, technologies, and investment products they use without being constrained by the rules of a larger organization. The "Red Tape" can be pretty intimidating with larger companies. I never enjoyed the feeling of being restrained in how I marketed.
Lower costs: Independent advisors can set their own fees and expenses. This can lead to lower overall costs for clients.
Branding: Independent advisors can build their brand and develop their own unique identity, whereas broker-dealers often require advisors to use the firm's brand. I always struggled with this because no matter how good a company is, someone somewhere has had a bad experience. It's human nature. No company is perfect, but I lost a prospective client's interest more than once due to a broker and it's reputation for using customer service centers based overseas and giving poor service quality. This was troubling to me, because I couldn't fix it.
Entrepreneurship: Going independent allows financial advisors to start their own businesses and control their own destinies.
Client relationships: Independent advisors can often build more substantial and longer-lasting relationships with their clients, as they can provide more customized services and individualized attention.
Technology: Independent advisors can choose the best technology solutions for them and their clients rather than being limited to the systems provided by a larger organization. I handpicked all the technology tools I use, from my calendar to custodian to data gathering. It all flows seamlessly, and I love it.
Compliance: Independent advisors have greater control over compliance and regulatory requirements, which can help reduce the risk of litigation and other legal issues. Compliance is a huge part of the financial industry, and with me being in Law Enforcement, I've always been a stickler for following the rules.
Transparency: Independent advisors often offer more transparency in their investment strategies and fees, which can build greater trust with clients. I post our maximum fees in plain view on our website. I don't believe in keeping secrets, so I don't have a problem with this information being public.
Culture fit: Independent advisors can create a culture that aligns with their values rather than being part of a larger organization with a different culture. The members of my firm are usually tough, gritty, and rough around the edges, like I am. We might curse a little and banter. It's all part of working tough jobs. You have to have a sense of humor. I definitely didn't fit into every corporate event I went to.
Niche specialization: Independent advisors can specialize in niche markets and offer services tailored to specific groups of clients.
Access to institutional-quality investments: Independent advisors can access a broader range of investments that may not be available at a broker-dealer. I don't plan to provide institutional investments, but who knows where the firm will be in the future.
Client-centric approach: Independent advisors can focus solely on their client's needs rather than being driven by a larger organization's sales goals and quotas. This one was huge for me because I never felt quite right receiving awards for commission-based performance.
Education: Independent advisors can focus on educating their clients on financial matters rather than just selling products, which can help build trust and long-term relationships. I strongly dislike sales. I used to start every meeting with, "I'm a terrible salesman." and explain why a client should NOT pick certain investments before reasons they should. This usually led to more trust, even if I wouldn't earn any commissions, and I preferred a client's trust over a few bucks.
Work-life balance: Independent advisors have greater control over their work schedule and can create a better work-life balance. Being able to adjust work around my patrol schedule was crucial.
Control over compensation: Independent advisors can control their compensation and keep more of the revenue they generate. I didn't love seeing a large percentage of my revenue kept by someone who didn't do any of the work for a client.
Succession planning: Independent advisors can plan for their succession and ensure their clients are cared for after they retire or leave the industry. I know I'll be in the industry for the next 30 years at least, but it's nice to know that one day my son can help dad run the business.
Regional focus: Independent advisors can focus on specific regions or communities, building deep connections and specialized expertise. I'm willing to bet no one knows the Memphis/Southaven area first responders as much as I do!
Finally, Innovation: Independent advisors can often innovate and experiment with new approaches rather than being limited by the rigid systems of a larger organization. If I want to update or change a system within my firm, it's a simple choice.
Hopefully, this sheds some light on how I ended up here, and I'm sure you'll agree that it was the right choice for our firm.