Independent Practices Attracting Larger Institution Employee Advisors

Candidates that are financial advisors at larger institutions in an employee structure typically wonder what a world in the independent space would look like, as a salaried lead advisor. 

They are attracted to thought of having more autonomy in recommendations, less red tape in procedures and in some cases the absence of any hint of proprietary choices. 

There is a lot of talent at these institutions that could be great additions to your boutique/independent practices but you’ll have to overcome some challenges (or help them see a different perspective) as they learn about your small business. 

Even though we are talking about a salaried position, these candidates still can associate joining an independent practice as RISKY.  

If you are a practice owner trying to hire an employee/salaried advisor for your practice, here are the hurdles you may face and what they are perceiving as a risk.

  • AUM Perception: “From Scratch vs. The Steward”
  • How they value benefits
  • Structured Growth Path vs. Influence/Equity/Succession
  • Working for a small business

Hurdle One:   AUM from SCRATCH vs. “Handed AUM base”

We recently chatted with an advisor candidate who could have been a great fit for a growing independent practice but couldn’t get past the AUM numbers of the hiring firm.  The practice we were assisting with hiring was managing $300mm and had other revenue streams from planning, benefits and insurance planning.  The practice was built by one advisor over the past decade, from scratch. 

The candidate shared that he is managing $400mm as a financial consultant at a large firm as an employee and therefore wouldn’t feel comfortable going to a practice managing less than he does.   To be clear, this would still be a salaried position and managing some of the existing clients of the practice.  It WASN’T to be a standalone advisor or strictly business development role. 

This isn’t a “right or wrong” way of looking at things but sometimes it is healthy to look at the origin of the AUM.  In many cases, the employee advisor working in the planning or private wealth department of a large bank or retirement/mutual fund company was in charge of retaining the AUM versus creating the AUM from nothing.  

This is NOT meant to undervalue the work of these advisors- as they are some of the smartest and technically sound we talk to.  However, we have to have a deep appreciation for the entrepreneurial advisor that built a practice from scratch- with 0 clients given and having to juggle the roles of finding clients, learning the planning craft, being a business owner and everything else that comes with the profession in the entrepreneurial structure.

Most (but not all!)  talented employee advisors at the large bank “first” or mutual fund “first” companies understand what was given, could be taken away.  They are aware that the dreaded comp changes could happen, support can be reduced and ultimately their division could experience mergers, divest, new leadership or simply just layoffs- hence why they are speaking about making a potential change.

If you find you as a practice owner find yourself in this position, here are a few tips:

  • Help the potential candidate see the evolution of your business – if you can- visually.
    • Do you have a business growth map showing the past and projected future?
  • The candidate’s risks are: layoffs, sell off of business unit, comp changes, new leadership…. What are YOUR risks in an independent practice?  Show your track record if you have a mature business:
    • Compliance:
      • If you have 0 client complaints, show that.
      • This can help if someone is apprehensive about joining a small business where ethics, values and decisions are connected to the owner(s) and not an institution.
    • Loss of a large client:
      • If you have diverse client concentration show that!
      • If you don’t have any clients that make up more than 5% of your revenue, share that!
    • Succession or Sale
      • Some candidates might have concerns of joining a small practice if they don’t understand timelines and WHO/WHAT is the succession plan if the owners are in later career stages.

Hurdle Two: Valuing Benefits

Entrepreneurial advisors may not have the same arsenal of benefits to offer the employee advisor at a large institution but they can be more creative.

Our first piece of advice is to remember, that likely the employee advisor was always “given” benefits. If you have always be entrepreneurial, you may have NEVER had robust benefits packages paid for by someone else. Therefore, you may inherently view them differently, and value it where many other employee advisors expect it.

I see many employer advisors put the benefits that they offer in their offer letter as a line item in a “total compensation” package. I’ve even seen some put in payroll tax, technology fees, rent, coffee bar, etc.! Candidates share they are turned off by that! Just share the base compensation, how variable compensation works, and what the benefits are!

Entrepreneurs can compete with being a little creative. Here are some areas we have seen practice owners be more flexible or “different” in effort to compete with larger institutions: designations and flexibility.

How will you pay for designations? Share that you will pay for designations if you are willing. Don’t have a long waiting period for it either! Many larger institutions have waiting periods or are restrictive in courses, study materials, etc. You could even give a BONUS or extra PTO day for courses passed in a year.

For Flexibility- can you allow for a day hybrid? How about two? There is benefit of being connected to practice growth- not just in revenue shares. We know of a firm that gave most of their employees the month of December off because they crushed all of their annual goals in 11 months!

There are a lot of talent at these institutions that could be great additions to your boutique/independent practices, but you’ll have to overcome some challenges (or help them see a different perspective) as they learn about your small business. Even though we are talking about a salaried position, these candidates still can associate joining an independent practice as RISKY.

Hurdle Three: Structured Growth Path vs. Influence/Equity/Succession

“GROWTH” is the number one reason why candidates, in all fields, are looking to make a change. We know growth means different things to different candidates. If feeling a sense of recognition through title and job promotions is important to the employee advisor then attracting them to a smaller team/independent practice may pose its challenges.

Likely this employee advisor at the larger institution can see a “ladder” of perceived career growth of various titles and additional responsibilities.

As an employer, you need to figure out if advancement through the depth of planning, sophistication level of clients and/or developing a specialty will scratch the non- compensation related growth itch for your candidate that is accustomed to “more corporate” structures. We recently worked with a client who recruited away an employee advisor at a large institution to their independent practice of just three people by sharing a five year timeline with different development milestones through their interview process.


Also, likely as an employer you are planning to grow the practice. Creating a “future organizational chart” at different years or asset levels and how the employee advisor role can have added responsibility and influence within those future roles may help the “corporate” minded advisor.

Finally, more and more practice owners are realizing, in order to attract and retain top advisor talent they must have a pathway to partnership or equity in the practice. How would an employee advisor gain equity in your practice? If a candidate cannot get excited about shifting from their larger institution role to the practice when there is a pathway to partnership, then it may just be the wrong candidate!

The most ideal candidate may be the advisor that “always wanted to run their own practice” but didn’t have the career risk tolerance to take the chance earlier in their career so they went through the ranks as an employee advisor.

Hurdle Four: Working for a Small Business

The worry about leaving a large institution and working in a “small business” as an employee can be common for employee advisors. Some core concerns have already been addressed which could also fall under the “small business” label such as benefit packages not as rewarding compared to their large institution benefits and clear “growth path” concerns.

The other concerns candidates share, assuming compensation is apples to apples, are:

· Not having layers of support.

· Not having access to certain research or even client offerings/investments.

· Potential sale of the practice to Private Equity or other practice.

· Any family dynamics where a relative could be taking over the practice or have preferred treatment.

· Concern over not being backed by a household name.

· Being stuck if they have chemistry differences between the practice owner or smaller team they are working closely with.

· No geographical flexibility in case of necessary move/relocation.

Much of the above is around overt risk aversion and we are talking about a candidate that is applying to be an advisor with a salary in the practice. We find many practitioners find the “risks” above as nonsensical since they are interviewing candidates for a W2, salaried advisor role – which is “nothing” compared to the risks of being an entrepreneurial advisor which is the way many of them have started.

Practice owners need to find out if the pain of the red-tape, lack of creativity and corporate politics is greater than the perceived potential “risks” of being in a small business.

While some of the concerns above may be challenging to address, practitioners should be prepared to address the “layers of support”, “non household brand”, “not having access to research or some client offerings.” The simple answers to these questions are how you are able to attract and retain your current clients with the resources you have and why you CHOOSE to stay in the structure you are currently in.