A significant trend is taking place in the wealth management industry—an increasing number of advisors are leaving their wirehouses to become Registered Investment Advisors (RIAs). In 2022 alone, wirehouses saw a net loss of 612 advisors, while RIAs gained 856, and this migration shows no signs of slowing down.
By 2027, it’s estimated that wirehouses will only hold 27.7% of industry assets—a sharp decline from their 50%+ market share in 2005. So, why are so many financial advisors leaving their wirehouses to become RIAs? And is it the right choice for you?
Below, we’ll break down the key differences between wirehouses and RIAs, explore why advisors are making the switch, and outline how you can navigate the transition smoothly. We’ll also highlight why Alden Investment Group is the ideal partner to support you through this process.
Wirehouses vs. RIAs: What’s the Difference?
Before diving into why financial advisors are flocking to the RIA model, defining these two business structures is important.
What are Wirehouses?
Wirehouses are large financial firms, like Merrill Lynch, Morgan Stanley, and Goldman Sachs, that offer a wide range of investment products and services through a national network of advisors. Some key characteristics of wirehouses include:
- Employee status and corporate structure – Wirehouse advisors are employees, so they must adhere to their firm’s policies, approved product lists, and compensation structures.
- Compensation models – Wirehouses typically employ commission-based compensation structures, which allow advisors to earn a percentage of the products and services they sell.
- Product limitations – Wirehouse advisors’ access to financial products and services is restricted to the specific set offered at their firms.
While wirehouses offer their advisors robust resources and brand recognition, their rigid corporate structure can make it challenging to address their clients’ unique needs. Additionally, the pressure to promote proprietary products can create conflicts of interest, potentially compromising what’s truly best for their clients.
What are Registered Investment Advisors?
An RIA is an independent financial advisor or firm registered with the Securities and Exchange Commission (SEC) or state regulators. As independent advisors, RIAs can run their own businesses or partner with established RIA firms. Either way, they enjoy greater control over their policies, practices, and product offerings.
Some distinguishing features of RIAs include their:
- Fiduciary duty – RIAs are held to a fiduciary standard, meaning they’re legally obligated to act in their clients’ best interests at all times.
- Compensation models – Rather than relying primarily on commissions from product sales, RIAs typically charge clients a percentage of assets under management (AUM) or flat fees for specific services.
- Flexible product options – RIAs can choose from a wider variety of financial products, allowing them to tailor their solutions to their clients’ needs without being limited by proprietary offerings or corporate mandates.
5 Benefits of Becoming an RIA
When asked about their regrets regarding going independent, many advisors say they simply wish they made the shift sooner. After all, going independent provides the following benefits:
#1 Greater Control and Flexibility
Wirehouse advisors are often limited in how they can serve their clients. Corporate policies, product restrictions, and sales quotas restrict their ability to offer personalized solutions. Many also feel pressured to recommend proprietary products, even when better options are available.
By becoming an RIA, advisors gain full autonomy over their business practices. They can choose from a broad range of investment products and tailor their services to meet their clients’ needs without worrying about corporate red tape. This flexibility empowers advisors to pursue their clients’ best interests, strengthening their relationships, retention rates, and overall outcomes.
#2 Fiduciary Responsibility and Client Trust
Another significant advantage of becoming an RIA is building deeper trust and stronger client relationships. Unlike wirehouse advisors who are held to a “suitability” standard, RIAs are legally bound by a fiduciary duty.
As fiduciaries, RIAs can provide objective recommendations without pressure from corporate mandates. This fiduciary commitment helps foster trust, strengthen client loyalty, and enhance advisors’ reputations—making it easier to grow and sustain a successful practice.
In contrast, the suitability standard only requires that recommendations be “appropriate,” which can create conflicts of interest, especially when wirehouse advisors are incentivized to promote proprietary products. As more clients become aware of this distinction, many choose RIAs for their unbiased, client-first advice.
#3 Increased Compensation Potential
Wirehouse advisors often face significant limitations when it comes to compensation. Despite generating substantial revenue for their firms, they only receive a small fraction of it—usually in the 45% to 47% range. Even as they grow their production, advisors rarely see a proportional payout increase. Instead, their wirehouse captures most of the additional profits.
In contrast, independent RIAs have far greater income potential and flexibility. After covering overhead expenses, many RIAs can achieve earnings closer to the 60% to 70% range, depending on how efficiently they run their business. This income often comes in the form of 1099 or K-1 earnings, providing potential tax advantages compared to traditional W-2 income.
RIAs also have complete control over their pricing models and service offerings. Rather than relying solely on commissions, they can charge AUM-based fees for asset management, hourly consulting rates, or flat fees for specialized services, such as:
- Tax optimization
- Retirement planning
- Estate planning
- Medicare planning
- Risk management consulting
Along with customizing their compensation, RIAs can earn equity in their business over time, transforming their practice into a lucrative asset that far exceeds the value of any wirehouse retention package.
Read More: Measuring Your Book of Business as a Financial Advisor
#4 Better Work-Life Balance
Nearly 90% of financial advisors leave the industry within their first three years, with many citing burnout as a leading reason. With their long hours, aggressive sales quotas, and demanding deadlines, wirehouses’ demands can quickly wear down even the most driven advisors.
Going independent offers a path to a healthier work-life balance. After all, RIAs can set their own schedules, choose the clients they want to work with, and customize their work environments.
Thanks to technological advances, RIAs also enjoy the option to work smarter rather than harder. Turnkey asset management platforms (TAMPs), like Alden COVE, can help advisors streamline their portfolio management, back-office tasks, and administration. As a result, 95% of advisors who outsource their asset management to a TAMP report significant improvements to their work-life balance.
Read More: 14 TAMP Features That Can Transform Your Independent Financial Advisory Practice
#5 Access to Cutting-Edge Technology
Speaking of technology, large wirehouses often rely on legacy systems that are slow, clunky, and difficult to integrate with modern tools. As a result, their advisors grapple with inefficiencies and struggle to deliver an exceptional client experience. This issue is so prevalent that it prompts over half of financial advisors to consider switching firms.
Advisors who go the RIA route are free to select their own financial technology solutions. From advanced customer relationship management (CRM) platforms to sophisticated TAMPs, RIAs can choose solutions that boost efficiency, streamline workflows, and enhance client experience.
That said, the sheer number of tech options can be overwhelming for new RIAs. That’s where partnering with an established RIA like Alden Investment Group can help. We connect advisors with best-in-class technology tailored to their business needs, whether they want to simplify their portfolio management, automate client reporting, or ensure seamless compliance.
Read More: 10 Must-Have Tools for Financial Advisors in 2024
Wirehouse vs. RIA: Which Business Model is Right For You?
Becoming an RIA offers compelling advantages, but it’s not the ideal path for every financial advisor. The right choice depends on your personal goals and preferred work style. Here’s a quick comparison to help you weigh your options:
Choose a wirehouse if:
- You prefer a structured, corporate environment with established systems and processes.
- You value the brand recognition and resources of a well-known firm.
- You don’t want to take on the operational responsibilities of running your own business.
- You’re comfortable operating within a compensation grid.
Choose an RIA if:
- You want to run your own practice and set your own policies.
- You don’t want the pressure of selling proprietary products.
- You value flexibility and have an entrepreneurial spirit.
- You want to build equity in your business and optimize your earning potential.
- You’re comfortable managing (or outsourcing) the operational aspects of your practice.
How to Make the Shift from Wirehouse to RIA
If the independence and flexibility of becoming an RIA appeal to you, you may wonder what’s involved in making the shift. Transitioning from a wirehouse to an independent RIA requires careful planning, but with the right approach, you can set yourself up for long-term success.
Here are six essential steps to guide your transition:
#1 Carefully review your current employment contract
Before leaving your wirehouse, look closely at your employment contract, especially any non-solicitation or non-compete clauses. These provisions may restrict your ability to take clients with you. While you can always rebuild your book of business from scratch, doing so can be time-consuming and require additional marketing efforts to attract new clients.
Read More: How to Attract and Retain Clients as a Financial Advisor
# 2 Determine your ideal business model
Once you understand your non-solicitation restrictions, the next step is determining whether you want to go fully independent or partner with an established RIA network or hybrid firm. Joining an RIA network can provide valuable perks, from back-office support to client transition assistance, making the move from a wirehouse much more manageable.
#3 Optimize your tech infrastructure
A significant hurdle all aspiring RIAs face is replacing the infrastructure provided by their wirehouse. You’ll need to secure reliable compliance, accounting, client management, and portfolio administration tools to run your practice efficiently. Fortunately, there are plenty of platforms to choose from. Alden COVE is an excellent option if you’re looking for an all-in-one solution to streamline your operations.
Read More: Five Ways TAMPs Help RIAs with Administration
#4 Choose your compensation model
As an independent RIA, you can select the compensation structure that best suits your service offerings and clients. Popular options include AUM-based fees, flat fees, and hourly rates. Some advisors choose a fee-only model, while others employ a hybrid approach that combines fees with commissions on certain products.
Read More: Financial Advisor Fee Structures: Comparing Flat Fee and AUM
#5 Transition your client base
If you’re allowed to bring clients with you, make sure to handle their transition with care. Tell them about your timeline in advance and reassure them that their best interests will remain your top priority. You can also highlight how your newfound independence will benefit them, from enabling you to provide more tailored services to strengthening your fiduciary duty.
#6 Promote your new practice
Whether you’re starting from scratch or simply looking to expand your client base, you need to start branding yourself as an independent advisor. You can do so using a combination of digital marketing tactics, paid advertising, and community outreach. If you need help selecting the right marketing strategy, Alden Investment can help.
Read More: 2024 Guide to Financial Advisor Marketing
Start Your New Chapter as an RIA With Alden Investment Group Today
Moving from a wirehouse to an RIA can unlock new levels of flexibility, independence, and earning potential. You can confidently pursue this career path with proper planning and support.
At Alden Investment Group, we specialize in helping advisors execute this exciting transition. By joining our RIA network, you’ll gain access to our:
- RIA/broker-dealer hybrid model – As an RIA and a broker-dealer, we make it easy to continue earning commission-based income while gradually transitioning to a fee-based structure.
- Cutting-edge tech solutions – Our advanced tech solutions can help streamline your operations, strengthen your client management, and ensure top-notch compliance.
- Comprehensive back-office support – By outsourcing key aspects of your operations and administration to our team, you can focus on what matters most: serving your clients and growing your business.
- Additional services – We’re always looking for new ways to support our advisors. From our succession planning services to our seasoned investment committee, we have a wealth of resources to ensure your business is as profitable as possible.
Ready to explore the freedom and opportunity of becoming an independent RIA? Contact Alden Investment Group today.
Sources:
Investment News. Wirehouses to continue bleeding advisors in 2024.
https://www.investmentnews.com/wirehouses/wirehouses-to-continue-bleeding-advisors-in-2024/248048
RIABiz. RIAs remain wirehouse kryptonite in 2024, and by 2027, JP Morgan, Merrill, Wells and UBS will see market share tailspin — RIAs the obvious culprits, Cerulli data shows.
https://riabiz.com/a/2024/1/3/rias-remain-wirehouse-kryptonite-in-2024-and-by-2027-jp-morgan-merrill-wells-and-ubs-will-see-market-share-tailspin-rias-the-obvious-culprits-cerulli-data-shows
Think Advisor. Why Advisors Are More Than Happy to Leave the Wirehouses.
https://www.thinkadvisor.com/2025/02/07/5-factors-driving-advisors-out-of-wirehouses/
Taylor Method. Why Financial Advisors Are Quitting The Industry (In 2025).
https://www.taylormethod.com/blog/sales-practice/why-financial-advisors-are-quitting-the-industry
Plan Advisor. Advisers Increasingly Turn to Third-Party Asset Managers.
https://www.planadviser.com/advisers-increasingly-turn-third-party-asset-managers/
WealthManagement.com. Broadridge: Tech Tools Fall Short, Leaving Advisors Suffering.
https://www.wealthmanagement.com/financial-technology/broadridge-tech-tools-fall-short-leaving-advisors-suffering