When the banking crisis hit First Republic, advisors were left with little time to consider their options. Suddenly, those who had transitioned from Merrill Lynch, Morgan Stanley, UBS, RBC, and Rockefeller Capital to FRB found themselves pushed back into yet another large wirehouse – JPMorgan. For FRB advisors seeking independence, there are platforms available that not only offer open architecture but also provide banking products and services in a more entrepreneurial environment.
Supported independence offers a transformative experience for breakaway wirehouse teams. Advisors gain access to turnkey RIA support, streamlining back-office needs while eliminating compliance, supervision, operations, and technology integration concerns. This allows advisors to focus on delivering cutting-edge solutions through open architecture platforms, making the process of establishing their practice far more efficient.
Independence brings more than just autonomy and control over one’s practice. The operating margins and valuations are exceptional. A typical RIA enjoys an average net operating margin of around 70% after expenses, with income taxed at 1099 rates. Single office RIAs command valuations ranging from 6-8 times EBOC and LTCG, while multi-advisor teams or larger groups can achieve valuations as high as 18-20 times EBOC and LTCG.
Independent platforms are not only more cost-effective but also have no contractual interests in advisors’ practices. They offer freedom, flexibility, and power, in stark contrast to the lock-ins at large firms, often spanning a decade or more, laden with complexities, and yielding diminishing payouts.
Supported independent platforms are driven to aid RIAs and acquisitions, providing highly affordable financing thanks to substantial VC backing. Moreover, they bring expertise in M&A and have access to abundant private equity, facilitating firms in acquiring others and creating small empires within the broader platform framework. As baby-boomers transition out, the potential for growth and expansion is boundless.
The Gershman Group has compiled a white paper on independent platforms, if you’d like us to send this to you, please reply “yes” to this message.
As the Editor of The Gershman Group, a boutique financial services consulting firm, TGG brings expertise in financial analysis, strategic planning, and market research. With a keen eye for detail and a passion for helping businesses navigate complex financial landscapes, TGG delivers insightful, high-quality content to empower informed decisions. Backed by years of industry experience, TGG makes complex topics accessible through clear and compelling communication, shaping the firm’s thought leadership and commitment to excellence in financial services.
