Advantages of Working with Independent Firms

The perception exists that investing money with large, established firms is the conservative route.  The explosive growth of the independent Registered Investment Advisor (RIA) tells a different story. Having experienced both platforms, we can offer insights between large traditional firms and the growing RIA space. 


A Registered Investment Advisor (RIA)is an advisor or firm engaged in the investment advisory business and registered either with the Securities and Exchange Commission (SEC) or state securities authorities. RIAs have a fiduciary duty to their clients, which means they have a fundamental obligation to always act in their clients' best interests.  Source: Investopedia


The operational differences include business functions outside core advisor duties of investing the assets and servicing the client.  In our opinion, this is where savvy independent firms separate themselves.  The result is often a cleaner, more efficient service model (see more advisors are going independent). 


  • People Over Profits– independent firms do not have a duty to shareholders, board of directors, or Wall Street profit expectations.  They can place client outcomes first and deliver enterprising solutions, i.e. cutting edge technology, innovative fee structures, lowering the cost of investing.

  • No Wasted Motion– the amount of time squandered within large organizations is mind-blowing.  Conference calls, sales meetings, spreadsheets, and middle management are huge distractions.  Research shows employees would rather watch paint dry than meet to discuss how much revenue they’ve produced year-to-date (productive people do things differently).

  • Investment Management is Changing– Investment fees are going down.  Transparency is increasing.  Financial institutions and advisors that work against clients will have nowhere to hide.  In our opinion, large firms will hunker down over an antiquated business model to preserve the revenue gravy train rather than innovate.  Being nimble and flexible allows forward-thinking firms to quickly pivot to adapt to changes in client preferences.

  • Associate Turnover vs. Ownership– RIA owners have skin in the game (personal capital, investing alongside their clients) and can provide stability across multiple generations.  Corporate employees are subject to the whims of their profit-obsessed institutions.  Layoffs, turnover, poor culture, ineffective management, and excessive sales goals lead to a rotating door of associates.      

  • Client Service- many large firms have followed the trend of moving "smaller" relationships to remote call centers, marginalizing the client experience.   It’s offensive to us that a $2 million client would not qualify for a local investment manager (see JP Morgan $10MM minimum for private banking services).

The investment side of the business directly impacts the way the client assets are managed.  Independent firms can deliver objective, conflict free advice without fixating over profit margins, asset flows, proprietary products and partnerships with mutual fund companies. 


  • Untainted Capital Market Expectations– when was the last time your investment manager was pessimistic on the market?  Fears of investor outflows are a big factor in capital market forecasting, i.e. their worst fear is that clients will pull fee’d assets if their advisor is bearish on financial markets.  

  • Lower Fees– bloated organizations need to charge >1% to pay for all the inefficiencies.  What they’re doing is “feeing” themselves into an unsustainable position by being short sighted and revenue focused. 

  • Client Centric Values– could you imagine a retail broker linking fees to client outcomes?  That would require professional money management and reduced compensation if they failed to do their job.  Slinging annuities and mutual funds to unsuspecting clients is much easier. 

  • No Relationship to Fund Companies– independent advisors can create a suite of investment solutions that are objective, conflict-free and low cost.  More importantly, there is no mandate to cross-sell products or gather assets. 

Working with a smaller, independent firm is not for everyone, but the advantages cannot be ignored. Industry trends, regulatory change, and innovation are telling the establishment the status quo isn’t good enough.  Independent firms that embrace technology, innovate, and promote better investor outcomes are the future of the profession.  Which side is your wealth manager on?

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