Which Way Do I Go?

“If you’re an adviser and you think the reason you aren’t successful is because you’re at a wirehouse or independent, that’s not it,” according to John Barry, Principal at JMB Wealth Management Inc., in Torrance, California.

Brett Howell, a financial adviser with Merrill Lynch, and Marko Ungashick, a registered investment adviser (RIA) at Lawing Financial, agreed that, in general, an adviser’s affiliation, whether wirehouse, broker/dealer, or RIA, does not make or break his practice, though it can affect deliverables.

Barry, who started his business at Merrill Lynch, said he knew he wanted to be independent. Although his broker/dealer is not known as a retirement plan specialist, when he was considering moving to the firm, the compliance department told him, “if it’s legal and ethical, we’ll find a way to do it.” Barry commented, “They’ve held true on their promise.”

“I am not sure if I chose my affiliation or it chose me,” Ungashick said. Although it was not a calling, per se, he commented, RIA was the delivery model that he believed made the most sense. Wanting clients to see his firm as a consultant, he moved from the commission-based model over time, and gravitated to the firm’s internal RIA, until all his business was running through that area.

Support services from the broker/dealer is one area where the affiliation can be a significant differentiator. Ungashick said that not having much back-office support is probably one of the biggest cons of being an independent RIA firm. Contrarily, Barry, an admitted “control freak,” said he prefers to find tools to fit his model, an approach that sits well with the independent broker/dealer model. On the other hand, Howell, who has been with Merrill Lynch for nine years, explained his satisfaction with the wirehouse model: “I am not someone who wants to get into the business of running an office.”

While brand name recognition has opened doors for Howell, it also has had the opposite impact, such as when those making the decision about a company retirement plan have had a negative relationship in the past with a personal adviser at Merrill Lynch.

The ability to sign on as a fiduciary also can separate affiliation choices. Howell admits that Merrill Lynch does not permit him to sign on formally as a fiduciary to his client’s plans, while Barry and Ungashick both admitted to being fiduciaries and said they tell their clients as much.

Illustration by Red Nose Studio