In its newly released white paper, “Options for Independence Tax and Succession Considerations,” Fidelity Investments says that over a 10-year period, RIAs could pocket a much as $21 million more in after-tax income than if they had stayed at a wirehouse.
The Boston-based firm is trying to convince brokers with $1-billion wirehouse teams to think less about their 300% retainer bonuses and more about long-term tax implications and succession-planning strategies.
Michael Durbin, president of Fidelity Institutional Wealth Services says the focus is on the multi-generational value of their business and admits you do need to be making a fair amount of money before it makes an impact on the business model you use. The suggestion is that advisors need to think about tax implications, a very integral part of being independent, and they are preferential over wirehouse brokers.
But getting advisors to think about estate planning taxes while considering a move to independence is a tough sell. Most who are looking to go independent feel restricted in the wirehouse environment and feel they can grow their business better under their own terms.
But it is definitely worth a “look” at the variety of business models advisors need to consider if they want to become independent as each one can influence the team’s tax situation. The tax benefits and succession safety-net advantage are outlined in the white paper.