Being an independent financial advisor has many advantages. Besides the pay structure, which grows as the advisor’s book of business expands, a properly established practice also provides the freedom to be your own boss, set your own hours and work as you see fit. Our founder Larry Kohn created L.M. Kohn as his “dream practice” back in 1990 because he knew there was a better way for independent financial advisors to work with a Broker-Dealer. And today, we have a network of advisors across 15 states with successful independent practices.
If you are considering a career as an independent financial advisor, and wondering how to get started, this article will provide you with a few helpful steps.
Have the right personality and drive
Independent advisors are their own bosses. This is ideal if you’re someone who’s a self-starter and works hard without needing direction from a supervisor. But the career requires a drive to succeed. In order to build a viable book of business, an independent advisor needs to be adept at networking to create strong client relationships and selling themselves, truly, as one with a passion for helping clients reach their financial goals. And then work hard to help these goals become a reality. Strong skills with numbers and analyzing financial data are also a must.
Earn the credentials
Graduating with an undergraduate degree in finance, accounting, economics, or business is a great place to start. And while it’s not a requirement, earning an advanced degree in a related field will help an independent financial advisor distinguish themselves from the competition. But beyond academic degrees, there are also certification and licensure requirements that must be met. Depending on the type of financial advisory services you wish to provide and state where you intend to practice, these required certifications could include Certified Financial Planner (CFP), Personal Financial Specialist (PFS), Chartered Financial Analyst (CFA) or Chartered Financial Consultant (ChFC). Registered Investment Advisers must also pass the Series 65 exam or Investment Advisers Law Exam, and register with the Securities Exchange Commission.
Being independent also means obtaining errors and omissions insurance, professional liability insurance that protects you against claims of inadequate work or negligence.
In the highly regulated world of the financial industry, staying up to date on the latest regulatory requirements is absolutely essential for independent advisors looking to make the cut. Running afoul of SEC or FINRA can cost an independent advisor dearly, and put a quick end to a blossoming career.
To protect your business, it is essential to partner with a quality Broker-Dealer who can provide oversight of your work and client communications to assure that you maintain compliance. And finding a Broker-Dealer who gives you the space and freedom to make your business your own and work as you see fit is an obvious plus.
At L.M. Kohn, we specialize in helping advisors make the leap to becoming independent, whether after a long career at a large wirehouse, or new to the industry and just getting started. Contact us today for more information about becoming an independent financial advisor.