I write quite a bit about the evolution of advisory practices into businesses and the shift from solo-practitioner offices to multiadviser firms and ensembles. This trend has been unfolding for decades, but solo advisers still make up more than half the industry, and they’re not likely to disappear any time soon.
Geography is one big factor. After all, not all advisers live in urban areas, and rural open space covers approximately 95 percent of the U.S. Beyond location, though, many advisers choose to remain solo practitioners for another reason: they simply prefer it that way.
Among other benefits, going it alone allows advisers to:
- Maintain control. If you’re the firm’s only adviser, you call all the shots, from the investment products used to the type of coffee offered to clients. Solo advisers enjoy having 100 percent of the say in how the business is run (as well as 100 percent of the responsibility). Doing things their own way without needing to compromise is a freedom that many solo practitioners are reluctant to give up.
- Focus on clients. Most advisers get into the business because they’re passionate about working with clients. But, as a firm grows in size, many advisers find themselves spending more time on peripheral activities, such as HR, technology, marketing and so on. By remaining solo, advisers can choose to keep it simple, spending most of their time with clients and forgoing added business management duties.
- Pursue a more laid-back lifestyle. Without partners to whom they must answer, solo advisers are free to not only practice as they wish, but to grow, not grow, or shrink the business as they choose (or simply see how the year unfolds). With a solo practice, work doesn’t necessarily dictate the adviser’s lifestyle; he or she has the flexibility to manage the business while pursuing outside activities. Given the choice, many advisers prefer more free time over more revenue.
Plenty of practices dissolve because the partners can’t agree on the details of running the business—whether it’s the type of office furniture to buy, the number of hours to work, or the amount of revenue to contribute to the firm. Breaking up is hard to do.
With that in mind, it pays to remember the wise words, “To thine own self be true.” Not every adviser needs to be part of a larger organization. That may be the trend, but successful solo practitioners will always have a place in the industry.
Managing Principal of Practice Management
Commonwealth Financial Network