TL;DR
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A Kiplinger report identifies three common challenges for financial advisers launching independent registered investment adviser firms: overlooking legal obligations, underpreparing for client conversations and trying to handle every operational task alone. The article recommends early legal and compliance review, client-focused transition planning and support from custodians and outside professionals.
A Kiplinger report on starting an independent registered investment adviser (RIA) firm identifies three common launch risks: failing to review legal obligations before resigning, going into client conversations without a plan, and trying to manage the transition alone. The guidance addresses advisers considering independence and the legal, client-communication and operational tasks involved in launching a firm.
The first pitfall is skipping a legal review before leaving an employer. The report advises advisers to have an attorney examine employment agreements and any noncompete or nonsolicit terms, as well as determine whether the adviser is covered by the Broker Protocol. It also recommends keeping a resignation letter brief and professional and waiting until after resignation to tell clients about the move. The report says a compliance consultant may also help advisers avoid errors that could delay a launch or lead to fines.
The second risk is underpreparing for client conversations. Advisers may focus on why independence benefits them without clearly explaining what it means for clients. The report recommends preparing answers about why the adviser is leaving, how accounts will transfer, whether investments will change and how long the process may take. It says the outreach format—such as email, phone or an in-person meeting—can vary by client relationship.
The third pitfall is trying to handle every operational task alone, from selecting technology and establishing workflows to completing paperwork and coordinating account transfers. Kiplinger recommends treating a custodian as a potential transition partner and asking what support is available before selecting one. Possible assistance cited in the report includes transition teams, communication templates, digital onboarding, automated transfers and tools for tracking transfer progress.
Responsibilities of Adviser Independence
Starting an RIA can give an adviser more control over how the business operates, while also shifting responsibilities that may previously have been handled by a larger firm. Advisers must account for legal, compliance and administrative work alongside client service. The source does not quantify how often departures or client transitions are complicated or disrupted.
The report recommends preparation and outside support during a new firm’s first year. It also advises explaining account transfers, investment changes and timing to clients. The article presents practical recommendations and does not establish that every new firm will encounter the same challenges or achieve the same results.
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Growth and the Appeal of Independence
The source describes independence as a continuing career option rather than a passing trend. Citing Cerulli, it says the number of advisers working at independent RIA firms grew at a 5.2% compound annual rate over the past decade, while other adviser channels were flat or declined. The source does not provide the underlying counts or a more specific date range for that decade.
Kiplinger also cites Betterment’s 2024 Advisor Survey: 59% of surveyed advisers named business freedom as their top reason for going independent. Personal freedom was cited by 51%, access to better technology by 44%, and earning potential by 43%. These are survey responses, not measures of the outcomes advisers achieved after launching firms.
The article’s recommendations focus on the practical transition from employment to operating a separate business. It suggests building a support network that may include attorneys, tax advisers, compliance specialists, experienced peers and a custodian. Its central point is that independence changes who is responsible for putting the business infrastructure in place.
“Freedom comes with a new set of responsibilities.”
— Kiplinger report
Transition Outcomes Vary by Firm
The source provides broad growth and survey figures but does not give the survey’s sample size, methodology or full respondent profile. It also does not quantify how frequently the three pitfalls occur or how much they affect launch timelines, costs or client retention. Its recommendations should be read as guidance from the report, not as a guarantee that any particular adviser will avoid delays, fines or client losses by following them.
Individual obligations may depend on an adviser’s employment agreement and circumstances. The report recommends seeking legal and compliance help but does not analyze any specific contract, regulatory filing or client-transfer case. The timing and support available for a transition may also differ by custodian and firm.
Plan Before Giving Notice
For advisers weighing a move, the sequence recommended in the report begins before resignation: obtain legal review, assess compliance needs, and prepare a client communication plan. Advisers can then compare custodians by asking who will support the transition, how long transfers may take, what assistance continues after launch and whether services are limited to larger firms.
The next practical milestones are likely to depend on each adviser’s employment terms, firm setup and client needs. The source does not identify a specific regulatory deadline or future event. Advisers planning a launch will need to confirm applicable requirements with qualified professionals and determine how their chosen providers will handle the operational steps.
Key Questions
What three pitfalls does the report identify?
It identifies overlooking legal review before leaving, underpreparing for conversations with clients and trying to manage all launch operations without support.
What should an adviser review before resigning?
The report recommends asking an attorney to review the employment agreement, any noncompete or nonsolicit terms, and the adviser’s Broker Protocol status. It also advises keeping the resignation letter professional and brief.
What should advisers explain to clients?
Advisers should be prepared to explain why they are leaving, how accounts will transfer, whether investments will change and how long the process may take. The report recommends choosing an outreach method that suits each relationship.
How might a custodian help with a new firm’s launch?
According to the report, a custodian may offer transition staff, communication templates, digital onboarding, automated account transfers and tracking tools. Advisers are advised to ask what support is available and whether it continues after launch.
Does the report show that most advisers succeed after going independent?
No. It cites industry growth and survey responses about advisers’ reasons for going independent, but it does not provide a success rate or establish that most advisers achieve particular business or client outcomes.
Source: kiplinger.com
