When going independent, should financial advisors really go it completely alone?

If hiring full-time advisors and other workers isn't an option at the outset, outsourcing, employing virtual employees and using cloud-based services could be good alternatives.

Thomas Balcom, founder of 1650 Wealth Management in Miami and Fort Lauderdale, Fla., uses Charles Schwab and TD Ameritrade for administrative support. Fidelity Investments and other third-party custodians also offer similar services.


Virtual employees – part-time or full-time – also work well for certain tasks, such as bookkeeping, paraplanning and managing content for marketing, says Alan Moore, founder of Serenity Financial Consulting in Milwaukee.

"When first hiring these folks, they may only work five hours a week, but they will be experts in their job," he says.

Premier Heritage in Woodbury, N.Y., now uses an intern, says Gregory Alerte, a managing partner.

The firm's two principles pay the intern a small stipend to help them with ad-hoc work, while she learns the business by joining them on appointments, taking notes and "seeing how to build long-lasting client relationships," he says.

Regardless of who advisors hire, they need to consider "what if it all goes bad?" says Jennifer

Woods Burke, securities attorney and the founder of compliance consulting firm CompliGuide in Palisdades, N.Y., which helps firms with their due-diligence and screening processes.

"What if they steal information? What if they steal money? Did I do what I should have done when I brought them on board?" Burke says.

"Without a checklist of what to do and what to look for, it's very easy for a bad actor to wreak havoc," she says.


Unless the advisor is also an experienced compliance professional, he or she should strongly consider investing in one, as such professionals typically focus on helping firms prevent problems, which saves money in the long term, Burke says.

But depending on the firm's size, a full-time compliance professional may not be necessary. If the firm is considering just assigning those compliance duties to someone, the principles should consider how the experience of that person will sound to a potential client, regulator or plaintiff's attorney.

Although outsourcing compliance is often the most financially efficient approach, in-house professionals can use software to monitor, consolidate and report on the required oversight tasks, says Jack O'Hara, the Philadelphia-based chief business development officer and director of marketing at BasisCode Compliance of Atlanta.

"While compliance may not be the most popular or interesting task an advisor deals with, it is a cornerstone of their business and is simply an unavoidable cost of doing business," O'Hara says.

Katie Kuehner-Hebert is a freelance writer in Running Springs Calif. She has contributed to Financial Planning, On Wall Street and American Banker.

This story is part of a 30-day series on going independent.

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