Becoming an Independent Advisor – The Hard Data

The “soft” advantages of becoming an independent financial advisor are obvious: greater autonomy, the freedom to choose your products and services, and the flexibility to pursue any market or opportunity that excites you. But the hard financial data increasingly make independence — or joining an RIA — an equally compelling business decision.

With so many strong organizations thriving in the ever-expanding RIA space, the real challenge is choosing the right destination.

Over the past decade, we’ve had thousands of conversations with advisors exploring independence, discussing how they want to grow and structure their businesses. The goal is always the same: bring greater value to clients and fill gaps in their current setup. Our process begins with understanding the WHY behind the advisor’s brand, followed by the HOW they plan to organize and operate. This approach builds a deep understanding between GVA and the advisor, particularly around enterprise value.

One constant topic: transition assistance — and how it factors into the bigger decision.

The Big Firm Example

An advisor producing $1 million in Gross Dealer Concession (GDC) could be offered an upfront payment of 70 basis points — $700,000 — to join a large brokerage. After ordinary income taxes, the net would be roughly $465,000. In return, the advisor commits to a 7 to 9-year contract, translating to about $66,000–$52,000 per year after taxes.

In exchange for this upfront capital, the advisor must repaper every account, adopt the firm’s technology, use its cookie-cutter compliance framework, custody solutions, and approved managers. Meanwhile, the firm earns significant non-compensatory revenue from the advisor’s clients, and the practice’s enterprise value is reduced — often eliminating other buyers in the future.

The RIA Example

An advisor producing the same $1 million GDC could be offered an upfront payment of 20 basis points — $200,000 — to join an RIA. After taxes, that nets about $133,000. Over a 7 to 9-year contract, the after-tax annual value is $19,000–$15,000.

While this appears to be a much smaller incentive, higher payouts, custodian flexibility, stronger compliance partnerships, open-architecture technology, and operational support often make up the difference in just 2–3 years — with far greater upside potential and long-term enterprise value.

The Decision Point

Choosing between a large firm and an RIA comes down to your priorities. Advisors who value autonomy, deeper client relationships, fewer conflicts of interest, and greater control over their financial futures often find plugging into an established RIA to be the clear choice.

We built GVA to deliver the structure, stability, and collaboration of a large broker-dealer without sacrificing the significant financial benefits an independent advisor earns when building — and eventually selling — the business they’ve created. Whether your goal is to build your firm or re-position for a future sale at the best possible enterprise value, going independent is a powerful opportunity.

We invite you to explore our Affiliation Options and connect with the GVA team to see how we can help you best serve your clients as an independent advisor.

Securities offered through LPL Financial, member FINRA/SIPC. Investment Advice offered through Great Valley Advisor Group, a Registered Investment Advisor and separate entity from LPL Financial.

LPL Compliance Approval # – 780815

James J. Spinelli, ChFC®, AIF® Co-Founder & CEO

James Spinelli co-founded Great Valley Advisor Group with a singular focus: to create a robust platform for advisors aspiring to become business owners. James holds a B.S. in Information Systems with a Minor in Information Technology, and an M.S. in Information Science (MSIS) from Penn State University. He furthered his education with an M.S. in Finance (MSF) from the Indiana University Kelley School of Business. During his time at Penn State, he was also a member of the Penn State Nittany Lions Varsity baseball team.

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