John Pierce is Head of Business Development at Cetera Financial Group, driving Cetera’s financial professional recruiting strategy.
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After celebrating another Independence Day, we are reminded of the value of our personal freedoms and the sacrifices made by those who made them possible. We are also reminded of the benefits and privileges that freedom can bring to our careers and professional lives. In fact, freedom is probably the biggest draw for business owners who decide to go out on their own.
Be it an online business, brick-and-mortar establishment or professional practice, the satisfaction that comes from building a successful business from the ground up—and doing it your way—is undeniable and an integral part of the American Dream. Based on our experiences helping financial advisors embrace independence, we have learned a thing or two about how independent businesses can thrive over time.
Here are a few considerations:
Ownership Matters
For those who are weighing whether to follow an independent business pursuit, it is important to realize that starting your own business does not necessarily mean “going it alone.” On the contrary, would-be entrepreneurs realize very quickly the importance of strong relationships and deep professional networks in determining the success of their business. Cooperation is key; you don’t need to work for others, but you do need to work with others.
That said, the freedom to make key business decisions without interference from management hierarchies, corporate boards and other controlling stakeholders is one of the reasons independent business owners can flourish over the long term. Now, independent business ownership is not a one-size-fits-all approach, and there are different ownership structures for different types of businesses. It is important to carefully consider your options before starting out on an independent path.
Open Architecture
One of the benefits of operating your own business is that you can decide how to conduct business with your customers. Independent businesses, relatively free from the burdens of corporate requirements, have the freedom to implement the technology that best suits the needs of their businesses and clients. For many, this means an easily modifiable, open architecture designed to evolve over the lifetime of the business relationship.
This also means the freedom to serve clients in a way that matches your values and mindset, something that is becoming increasingly attractive in today’s marketplace. This is especially true for “high-touch” services like financial planning and advice, where the freedom to define the customer relationship is critical to the long-term success of the business. This is increasingly becoming the norm in other customer-centered industries beyond financial services.
Client Selection
Despite the old saying, the customer may not always be right—at least for your business. One of the primary allures of independence is the ability to build a client portfolio that reflects the vision and trajectory of your business. Some prospects may not be the right fit for the services you can offer, and that’s OK. As an independent entity, you have greater freedom to refer them to another, more appropriate service provider than you would if you had remained part of a corporate organization.
Corporate Mandates
Decrees from the top of an organization, while usually well-intended, can sometimes bog down the normal business process. Be it a policy change, strategic pivot or operational shift, the time and cost associated with compliance can put a damper on productivity. Independent businesses can operate with relative freedom from the mandates that often slow down the efficacy of the operation.
Financial professionals want a professional home capable of supporting their growth aspirations where they are supported yet maintain flexibility and autonomy to operate independently. Finding that balance can be a challenge and there is no one-size-fits-all approach.
Compensation Freedom
Following an independent business model means you can determine the best compensation structure for your business. We are fortunate in the financial advice industry to have a range of approaches that allow independent advisors to select the best system for their practice. Giving up excess compensation for the benefits of working for a large firm may not make as much sense as it once did, considering the pandemic has forced many of us to operate more independently than ever before.
One action step you might consider is evaluating the tangible value you receive from your large firm for their overhead charges. The pandemic forced independence within large firms and now that we are in our "new normal," does it make sense to pay all those overhead costs?
Putting It All Together
As we look ahead to the second half of 2022, consider your options when it comes to your business structure. If you’ve dreamed of a more independent model but worry that the challenges are too daunting, know that there may be a suitable balance and a middle ground available. The pandemic has presented you with optionality. Now may be the time to find a structured and supported model of independence that can help your business reach new heights this year and beyond.
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