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This is the latest installment of a new, regular column to answer questions from advisors who are considering transitioning to an RIA model. To see Brad’s previous articles, click here. To submit your question, please email Brad here.
In the 1994 movie classic, our wrongly imprisoned hero, Andy Dufresne crawled through a river of – you know what – and came out clean on the other side. I am not suggesting the plight of an imprisoned – er, I mean, captive – advisor is so dire that it’s worth your own sewer-pipe expedition to reach the promised land.
But there are parallels worth noting.
No advisor has asked me this Shawshank referenced question verbatim. But I am frequently asked what an advisor should expect as they leave their current firm to transition to the RIA model.
The Shawshank Redemption – a box-office bomb that struck gold in syndication – follows the travails of several prisoners at Shawshank State Prison. There are many applicable themes woven throughout the movie that apply to our profession. Do not get me started, though, on a comparable analogy about the steps the warden took to prevent prisoners from ever leaving!
A notable theme is that it is possible to become “institutionalized.”
First expressed via the character Brooks Hatlen, the theory of institutionalization is that, if constrained by a particular environment long enough, you become not only accepting of it, but eventually reliant on it. Thus, leaving that environment results in an unfamiliar transition.
In Brook’s case, he was paroled from Shawshank into a world that provided him immensely more freedom and control over his life. Yet, he had become so institutionalized at Shawshank that he struggled under his newfound freedom.
Or take the character Ellis “Red” Redding, played by Morgan Freeman, who couldn’t afford a trip to the bathroom without asking permission upon leaving Shawshank. He, too, had been institutionalized.
I have never witnessed advisors in an outright struggle with their newly found freedoms upon moving to the RIA model. Many, though, have found the transition an evolutionary experience more than a singular event.
Take my situation, for example. For nearly 20 years, I worked in a large corporate environment. While that path provided me many opportunities for which I remain grateful, the mere structural aspect of it meaningfully constrained me in many ways.
I could not be quoted in the media to build my brand. I could not author an industry-specific blog for business-development purposes. I could not make RIA explanatory videos, as I have now done 35+ times. And I certainly could not have authored this column I am now writing for Advisor Perspectives.
You probably have faced similar type constraints on:
- how you set your fees;
- how you brand your practice;
- how you communicate with your clients, and prospective clients; or
- the products and services you offer.
I could go on and on.
How would you feel if, instantly, in the blink of an eye, you went from having those constraints to not having them?
When I left my captive environment to launch my firm, Transition To RIA, I admittedly experienced a period of institutionalization. Not in the sense of fear I couldn’t adapt (R.I.P. Brooks), but when presented with a new opportunity (e.g., to appear as a guest on a podcast), my initial inclination defaulted to my institutionalized mindset of “I’m not allowed to do that.”
It was a cathartic experience. When catching myself defaulting to this reaction, it was refreshing to realize I could pursue such activities however I wanted. That is a wonderful feeling.
So how does this relate to breakaway advisors?
Many of you have been with your current firms for a long time. You have become accustomed to the “rules of the institution.” Just as Andy, Red, Heywood and the rest of the Shawshank crew never lost sight of the additional freedoms available to them, neither should you.
For those who ultimately go over the wall and instantly experience those freedoms in full, I am confident that you, too, will experience this refreshing, cathartic evolution. I am certain you will quickly move past the default hesitations and enjoy the fruitful new path for your practice.
Next time your current firm tells you that you are not allowed to do something, ask yourself, ‘Is it because industry regulations do not allow it, or is it a firm decision?” Further, if you were in the RIA model, what would the answer be? Might it be time for you to peek over the wall?
Andy Dufresne ,“Crawled to freedom through five hundred yards of excrement-smelling foulness I can't even imagine, or maybe I just don't want to. Five hundred yards... that's the length of five football fields, just shy of half a mile.”
For a whole lot less effort, you, too, can experience what being released from an institutionalized mindset feels like.
As Red would say: get busy living or get busy dying.
Brad Wales is the founder of Transition To RIA, a consulting firm uniquely focused on helping established financial advisors understand everything there is to know about WHY and HOW to transition their practice to the RIA model. Brad utilizes his nearly 20 years of industry experience, including direct RIA related roles in compliance, finance and business development to provide independent advice regarding how advisors can benefit from the advantages of the RIA model.
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Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.
