August 17, 2022
Louis Diamond Quoted
By Cheryl Winokur Munk
For wirehouse advisors considering a leap to the independent channel, getting the process right can mean the difference between a smooth landing and a face-flop.
Not fully vetting business portability. Breakaways should ensure that everything a client does today can be accommodated at the new firm, or have an alternative option, says Louis Diamond, president of Diamond Consultants, an executive search and consulting firm in Morristown, N.J.
For instance, a client may have an investment in a private equity fund that is accessed through a proprietary feeder fund, or cash management products tied to the firm. Not having an accurate reckoning of which of the firm’s offerings clients are using—well ahead of leaving—puts departing advisors at a disadvantage, Diamond says. They’ll either have to scramble to be able to provide the offerings or work even harder to convince clients to transfer their business regardless, he says.
There are hundreds of details to address before advisors can officially hang out their shingle, and there’s a lot at stake. Getting it right is especially important given the thousands of advisors joining the RIA channel on an annual basis. More than 1,600 advisors each year launch about 700 new firms and bring with them about $180 billion in client assets, according to McKinsey, citing industry data.