The advisor must also take into account ancillary expenses such as filing fees, the printing of disclosure materials, etc. For most advisors taking in $100,000 in gross annual income, it might be tough to stay under that $15,000 figure given the current regulatory requirements.
Remember, tasks of this sort also take the advisor away from his or her primary work with clients and client acquisition, at least part of the time. This could ultimately degrade the growth potential of the firm and leave the advisor with even less net profit.
There is no magic number that will tell a financial advisor to either join the B-D ranks or go it alone, and advisors must weigh all the factors, not just financial ones. They have to think about the style of their practice and how well it may match up with a B-D's. And they must assess how a move to a B-D might affect their clients.
Some advisors gather client focus groups to discuss the benefits and drawbacks, exploring clients' issues, fears, questions and concerns in a controlled environment that fosters an atmosphere of inclusion in the decision-making process.
The advisor must also include the thoughts, ideas and concerns of staff when deciding the future of the firm. The staff's input will go a long way toward helping them accept the eventual changes they may be charged with implementing.
By incorporating all of the decision factors in the process, the financial advisor should find the direction that is most efficient and productive for the future.
David L. Lawrence, RFC, ChFE, AIF, is a practice efficiency consultant and is president of EfficientPractice.com, a practice consulting firm based in San Diego, Calif. (www.efficientpractice.com). The Efficient Practice offers an advisor network and a monthly newsletter.