Q&A: Why Consider Independence?

13 January 2022 by National Bank Independant Network
Three National bank experts share their thought about money taboo

Financial advisors invest significant time and effort to become licensed as portfolio managers. However, many of them are not aware of the option to operate independently. Business Builder spoke with Paulo Demarco, Regional Vice President – Business Development and Relationship Management, about the benefits of going independent.

What are the top reasons for portfolio managers to consider independence?

There are many reasons to consider this option. I’d say the top two are increased revenue and freedom to serve your clients as you see fit.

Let’s look at increased revenue first. Wealth managers who leave a large organization to start their own firms can significantly boost their revenue.* That’s a compelling factor – especially when you consider that you’ll have plenty of support: a “back office” solution is readily available to ease the transition and to help you run your business.

Point number two is the full control to service your clients as you see fit. At a large institution, for example, you may face limitations on purchasing certain products or be “nudged” toward others. As an independent, you have total freedom to do what you love: help to secure your clients’ future by picking the options that best suit their needs.

Are there other benefits you’d like to highlight?

Incorporation can be a benefit from an income tax perspective depending on how your business is structured. When you own your own business, you have the potential to benefit from a number of deductions and credits. An accountant can help you work through these options and determine what makes the most sense for your business.

Also, while it may not be top-of-mind, business succession is an important consideration. Portfolio managers spend years building relationships with their clients. They understand their clients’ financial goals, but also get to know them personally, by learning about their families and personal priorities. When it’s time to retire, or move on to a new opportunity, a large organization may not give you a choice about where those relationships go. When you’re independent, you can choose a buyer whom you know will be a good fit for your clients. Moreover, of course, the financial reward from selling the business is much greater for an independent, incorporated business than for an employee.

Some canadian wealth managers overlook the opportunity of independence. Why is that?

Either they may not be aware of the option, or they might assume that life as an independent portfolio manager will look very different from their current situation as part of an organization. PMs in the latter category may be concerned about losing supports such as technology, HR, etc.

Nothing could be further from the truth. In fact, it’s possible for wealth managers to replicate their current situation in an independent context.

At NBIN for example, we have a back office with many of these supports “built in” and a network of external partners who provide expert guidance for elements like compliance. We are there to make the process as seamless as possible.

On that note, what would you say to advisors who are hesitant to take on the responsibility of compliance?

That concern is understandable, but the reality is that there are many compliance professionals – both companies and individuals – who are ready to partner with you. These experts understand the nuances of the regulatory environment inside and out. They can guide you through the process.

In fact, at NBIN we can bring in a compliance partner to have a discussion about what independence would look like for you. We dig in and get granular! That way, you can make a fully informed decision.

What final thoughts would you like to leave with us?

I’d like wealth managers out there to know that they have other options. Independence offers many advantages, and plenty of support is available to help you make the transition. If full independence isn’t for you, there are other paths – for example, joining an independent portfolio management firm. Just don’t miss the opportunity to explore the possibilities!

Visit NBIN’s “Going Independent” site to learn more about starting your own portfolio management firm. You’ll find information and tools, as well as tips from portfolio managers who have already made the switch.

*To gauge how much you would earn as an independent portfolio manager, try out NBIN’s Income Calculator

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