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How $1 billion-dollar wirehouse teams should go independent

TransitionsSean KernanComment

A few weeks ago, I interviewed Matt Sonnen, founder of PFI Advisors, a consulting firm that assists large advisor teams (most over a billion in revenue) breakaway from wirehouse firms and go independent. PFI released it's first white paper this week that discusses using a pure consulting approach versus giving up equity in your firm or some sort of revenue-sharing model.

There are plenty of other options out there to get help establishing a new firm. Two of the biggest are Hightower and Focus Financial. However, bofth of those involve sharing equity and/or revenue with the parent company.  

There are a lot of instances where a revenue-sharing model might be a great fit, usually for the more typical solo advisor or smaller firm. That's kind of who I cater to in our business - we take a small cut of revenue and you can plug into our network and get a lot of the benefits of scale. 

However, what Matt and his team have found as you get to a certain size, you can do that scale on your own, and I tend to agree. If I was running a billion dollar plus team inside of a wirehouse, I would look to establish something on my own, but the problem is you really don't know how to do that. When you get to that kind of size, you definitely want to make it smooth transition and don't want to do a lot of experimenting, and that's where a team like Matt's at PFI is a huge asset. 

From my perspective, that's what my firm does on the smaller level, maybe in the $50-$100 million AUM ballpark. We have a little different business model from PFI, but we essentially serve the same purpose, helping advisors make the move to independence. 

Feel free to share your thoughts on the white paper in the comments below or you can always email me your questions at sean@indyFA.com

PFI Advisors website