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Independent Financial Advisory

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When Should You Join Independent Financial Advisory?

For experienced Financial Advisors, Personal Bankers, Priority Bankers, Private Bankers, getting into an Independent Financial Advisory (IFA) firm is often, a plausible but difficult career option.  You already have the license, knowledge and client base.  Should you join an IFA?  Is it a good career path?

What if you are fresh out from college or looking for a career switch?  What if you have $300 million portfolio?  Is IFA too small for you?

When would be a great time to join an IFA?

It is difficult for anyone to answer.  Which career phase you are in right now, would perhaps better determine if joining IFA might be a good time for you.

There are many options to continue to practice as a wealth manager or financial advisor.  Read More: 5 Types of Financial Institutions to Join as a Wealth Manager

  • Insurance Co.
  • Independent Financial Advisory
  • Retail Bank
  • Private Bank
  • Brokerage

We look at different situations when you should join an Independent Financial Advisory firm?

No. 1 If you have a relevant financial advisor license

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You would be familiar with financial products such as

  • Insurance
  • Investments

Getting into Independent Financial Advisory is more a matter of choice for yourself.

 

No. 2 If you are working in a bank

Head of Wealth Management
Head of Wealth Management

You would be familiar with financial products such as

  • Insurance
  • Investments
  • Deposits & Loans
  • Stocks & Bonds
  • Treasury, Foreign Exchange and Structured Products

Getting into IFA means you will no longer be dealing much with deposits and loans, stocks and bonds, treasury, foreign exchange and structured products.  Although some IFA firms do have access to structured products, equities & bond platforms, that would be dependent on the setup and access to the global range of financial instruments.

Not being able to do the broader range of financial products, means losing touch with the active side (Foreign Exchange, Interest Rates, Forwards & Swaps etc) of the global financial market.

In addition, most local and regional banks have a large client base to work on. This means getting used to not having a large established financial brand to get to prospects and clients.

On the other hand, IFA firms are much lower in cost setup relative to banks’ infrastructure. This means you will not need to have a large client base to sustain the business operation.

Spending little time on keeping in touch with fluctuating foreign exchange rates, interest rates, dealing with less volatile financial instruments means you are able to focus on finding and building quality relationship with clients.

 

No. 3 If you have the client base

Joining any of the following is possible for you.

  • Insurance Co.
  • Independent Financial Advisory
  • Retail Bank
  • Brokerage

As you already have the client base, you might need to discuss with your clients their preferences and your career aspirations (as your clients might not support your decision ).

If your clients or yourself are always thinking about fiduciary duties, providing independent advice, being able to refrain from making any financial decisions for an extended period of time, joining IFA might be a good path.

Since IFAs are not owned or related to any financial institutions, there is usually no inclination to support certain brands or products.

However, this means the loss of support / backing of a large financial institution.  For example: if you are part of a bank or insurance company that is going insolvent, you can be assured that with or without national insurance programs, the bank or insurance company will be subject to intense scrutiny and, possibly restructured by the government.

IFA tends to be much smaller in size compared to banks or insurance companies, losing the advantage of being able to save themselves or negotiate through tough times.

This would also impact the percentage of clients’ assets for you to manage in an IFA, compared to being in a bank.

 

No. 4 If you have quality High Net worth clients

Portfolio Advisory
Portfolio Advisory

High Net worth clients have much more assets, at least $1 – $2 Million in liquid assets.  Sometimes, you might even have clients having $5 Million – $100 Million, or much more in liquid assets.

You will have more options such as Private Banks, External Asset Manager and Family Offices.  Though the standard career path remains:

  • Insurance Co.
  • Independent Financial Advisory
  • Retail Bank
  • Brokerage

Having more options means a selection headache.  Do you get into a dedicated High Net worth advisory platform such as Private Banks, External Asset Manager and Family Offices or do you get into full suite financial services platform such as Insurance firm, IFA, Retail Bank and Brokerage.

Getting into IFA is thus a difficult decision for yourself, if you have quality High Net worth clients.  Would IFA be the suitable platform for you?  If your clients and yourself are not looking for sophisticated financial advisory services / solutions, IFA could be the perfect platform for you.

IFA Core Services:

  • Financial Advisory
  • Portfolio Management
  • Wealth, Succession and Tax Planning

Read More: 

 

No. 5 If you are looking at an early career switch

And you don’t have the financial advisory license, it can be a scary path.  But many financial advisors get into advisory jobs fresh out from school.  The process of being an Independent Financial Advisor and Financial Advisor are:

  • Pass Exams and Get Certified
  • Find Clients
  • Build Financial Advisory Knowledge
  • Plan Your Own Schedule
  • Get clients to provide a sum of money to you to manage
  • Manage clients, money and investments

Though a difficult journey, those who manage though enjoy the flexibility in the work and alongside, being able to directly affect the income flow.

 

No. 6 If you are looking at a late career switch

You already have the network, prospects and friends who are wealthier than in the 20s or early 30s.  You might already have a financial advisor yourself, and is frustrated at the lack of good quality service or advice, or you want to do the same, or do better.

Insurance and Investment products would also be familiar terms to you, making the learning journey much easier.

Late or early career switch, you go through the same process:

  • Pass Exams and Get Certified
  • Find Clients
  • Build Financial Advisory Knowledge
  • Plan Your Own Schedule
  • Get clients to provide a sum of money to you to manage
  • Manage clients, money and investments

 

No. 7 If you just got out from school … …

Graduate Exploring Career Options
Graduate Exploring Career Options

Visit Student Corner or read the following articles:

 

So, when is a good time for you to join an Independent Financial Advisory firm?  Are you a new advisor or experienced advisor?  Are you in a bank with a large portfolio of clients?



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