Independent Advisory Firms

Brent O’Mara is a cofounder of WealthPlan Group, an Omaha based organization that supports independent financial advisors, and the entries in this subject explain the kind of firm such an organization serves: what an independent advisory firm is, how it is registered and organized, and how the model came to be.

The legal starting point is a definition. The Securities and Exchange Commission describes an investment adviser as a firm or person that, for compensation, engages in the business of advising others about the value of securities or about investing in them, or of issuing reports about securities as part of a regular business.¹ Registration under the Investment Advisers Act of 1940 began at once: The New York Times reported in February 1941 that 709 advisers had already registered with the commission, and printed the names and addresses of the newest.²

The independent firm as it exists today is younger. A 2023 history in WealthManagement.com dates the custody arrangements behind it to the mid 1990s, when the independent adviser was still a novelty and most advisers were employees of large brokerages, and counts more than 35,000 independent firms now; it also reports that about half of the assets at the custodians and independent broker dealers are overseen by firm owners past sixty, and that a quarter of advisers have no written plan for who takes over.⁵ The Wall Street Journal told the story of one team that quietly built its own firm over half a year before resigning from a large brokerage, and called the pattern a trend reshaping the industry.³ Inside the firms, structure varies: a 2014 analysis found 47 percent of advisers working alone and 33 percent in teams, with teams making up half the structures at registered investment advisory firms, and described mergers as the route by which solo practices gain capacity, resources and a successor.⁴ What any one practice’s handoff requires depends on its owners’ personal circumstances, a matter for the qualified legal and financial advisers they engage.

The entries in this subject are What a Registered Investment Advisor Is, Form ADV, RIA Versus Broker Dealer, What a Custodian Does, How Independent Advisory Practices Are Organized, Advisor Succession Planning and The Rise of the Independent Advisor.