Independent Advisors
Are You Independent?
Annual Audit
FA Ownership - Client will transfer accounts (ACATs) if you change firms.
(3) Poor Service
Independence = Growth
![Independence = Growth One](/i/infographic_independent.png)
1099 Income Statement
Two Financial Advisors & Two Client Associates
Top-Line Revenue
$3,000,000
Minus Expenses
$1,180,000
Equals Net Income
$1,820,000
Divided by Revenue
$3,000,000
Equals Payout
60%
Selling "The Book" at Retirement
Two Choices
- Inhouse Sale
- Open Market Sale
Model of Profitability
- EBITDA: Earnings before Interest, Taxes, Depreciation & Amortization
Market Multiple Range (as of 2024)
- 5 to 12 (depending on size and quality of book)
Taxes
- Long Term Capital Gains vs. Ordinary Income Taxes
Example (Hypothetical for Illustrative Purposes Only)
- Big 4 Inhouse Program
Revenues 3,000,000
Deal 250%
Revenue 7,500,000
Payout 45%
W-2 3,375,000
Ordinary Income Tax 35%
Net 2,193,750
- Independent Channel
Revenues 3,000,000
EBOC 65%
EBITDA (%) 35%
EBITDA ($) 1,050,000
Multiple (x) 10
Price 10,500,000
LT Cap. Gains 20%
Net 8,400,000
- Independent Premium 6,206,250