This is typically where Super OSJs firms have offered enormous value to former wirehouse veterans, providing them with not only top-level transition solutions but virtually the same technology, business coaching and compliance support in which they have always been accustom. Now, given what the post-DOL environment is likely to look like, with smaller IBDs continuing to consolidate with larger players, having someone to help you navigate the internal workings of the IBD will be more important than ever, meaning the importance of these kind of partnerships will only intensify.
3) Is the majority of your business already fee-based advisory in nature? Just as you'll need to examine your book of business to decide whether clients will remain loyal, you must also study it to determine the nature of those relationships. If the substantive majority of your business is fee-based—and for the overwhelming majority of the wirehouse world, it is—the pending DOL rule is not likely to impact a transition one way or the other.
But if your practice does mostly transactional, brokerage-based business, the DOL rule is likely to have a significant impact, since no matter what the final version looks like, the days of earning commissions within an IRA are numbered. So rather than worrying about whether independence is viable, instead use this ruling as an impetus to adapt to the future regulatory environment by converting those brokerage accounts into fee relationships.
While there’s no question the regulatory environment is changing rapidly, that doesn’t mean everyone should panic once the DOL finally issues its long-awaited rule. Instead, it means wirehouse financial advisors ought to conduct a clear-headed review of their business, including being honest about how ‘sticky’ their client relationships are and the kind of work they do for them if they're weighing a move to independence.
And if these questions don’t create more problems than solutions, independence is a good match. Remember, IBDs are expected to pursue high-quality, top producers from the wirehouse world with great vigor as the impact of the new regulations come clearer into view. Start negotiating with them now.
Steven Dudash is president of IHT Wealth Management, a Chicago-based team of experienced wealth management professionals.