The Breakaway Advisor’s Checklist

The decision to break away is a big one. In this blog, Trey Ruch, CEO at LibertyFi, and Jay Hummel, Partner and Co-founder at Wealth Advisor Growth Network, a strategic LibertyFi partner, share factors you should consider before breaking away. These can help you make more informed decisions and increase your chances of success if you decide to strike out on your own.

Get Legal Advice

The first step is to seek legal advice. It’s important to understand the terms of employment, including non-competition and non-solicitation clauses, and notification periods. Under the terms of many non-competes, advisors are restricted from competing with their former employers. If you have a non-solicit, you can start your own practice and compete against your former employer, you just can’t solicit your old clients to move their business to you. To avoid potential lawsuits, be sure to honor any notification periods your previous employer included in your agreement.

Go It Alone or Join an Existing Firm

If you decide to break away, the next decision is to either create your own practice or join an existing one. Setting up your own shop is hard work. Joining an existing firm may give you the freedom you’re looking for without the challenge of setting up your own firm. If your retirement is less than five years away, creating your own firm might not be the right fit as many new businesses need at least five years to achieve success. Size also matters. If you can’t quickly get to $200 million in billable assets, it may not make sense to go it alone.

Negotiate with Custodians

Launching a practice is expensive. You can defray some of those costs by negotiating with custodians, which offer transition money for new business. Note that if you work with a recruiter to negotiate with a custodian, the recruiter will usually keep those transition dollars. 

By handling the negotiations, you can invest the transition dollars in marketing, technology, or other areas that will help get your RIA off the ground. If negotiated well, a large percentage of your initial costs can be reimbursed by the custodians. 

Identify Your Target Clients

To be successful, you need to understand the type of customer you currently serve and the type of customer you want to serve in the future. This fundamental decision will drive other decisions down the line, including your service menu and the supporting technology you’ll need.

For example, if you want to serve ultra-high net worth families, your technology, operational infrastructure, and service menu will be quite different than if you’re serving higher-volume, lower-asset, retail consumers.

Define Your Investment Philosophy

Define your investment and money management philosophies to inform the types of assets you’ll invest in and how you will manage money.

Access Seed Capital

Because launching a breakaway can be expensive, you might need access to capital. There are a few options: 

  • Lead advisor – If the breakaway’s lead advisor has done well, he or she may be willing to provide the working capital or forego a salary for some number of months in exchange for a majority stake in the firm. 
  • Bank loan – Secure a Small Business Administration-style loan from a bank. 
  • Strategic partners – Long-term strategic partners may put up working capital in exchange for an equity stake in the firm. In addition to capital, these types of partners often have deep experience working with RIAs, as well as useful contacts in the industry. Strategic partners can also help with early decisions that range from staffing and compensation plans to real estate and fixtures and fittings.
  • Accelerate collection of client fees through conversion – Many billing system conversions are handled during the second stage of the conversion process, which can create as much as a 90-day drag on cash-flow.

    The best way to fill this hole in cash flow is to choose technology with an integrated billing system and a staff dedicated to set up and administrate fees as accounts move over. LibertyFi prides itself on its efficient billing protocol. Handling your billing administration as part of the conversion process releases operating cash flows immediately, thereby reducing the amount of extra capital required to fund initial operations. 


For advisors considering breaking away, it’s important to consider core capabilities: Few breakaway advisors have the experience or expertise to manage integrated financial services software. Success for an RIA depends on creating experiences that satisfy clients, which means that advisors should focus on what they do best: working with clients.

By partnering with an experienced team of tech consultants, RIAs can keep their clients happy while getting the most from their investment in financial technology.

Contact Us for Help

We have deep expertise helping growth-oriented RIAs drive revenue and scale their businesses with the Envestnet unified advice platform of integrated solutions. Our personalized consulting services include evaluating clients’ business processes and their supporting technologies, implementing the Envestnet platform, streamlining operations, and providing middle-office support. 


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