Independent Tuck-Ins: The Sweet Spot for Advisors

Advisor Advocates Podcast

One of the best kept secrets in the financial services industry is the Tuck-In model. One of the best descriptions I’ve ever heard for this is a “hotel for independent financial advisors.” When I left the employee advisor world for independence in 2013, I was unknowingly at the time being introduced to my first tuck-in firm. A collection of Independent Financial Advisors operating under one roof sharing one brand.

While some advisors may elect to use their own branding, it is usually best for all to operate under the common DBA of your team, managed by the independent RIA or if with an independent broker dealer, your OSJ. Typically, this brand provides website, marketing, office space, and collaborative environment. While you ultimately are operating your own business as a 1099 contractor, your are a part of a supportive community often working together building shared investment model portfolios, join marketing materials, and client events, just to name a few.

The economics of this set-up will vary a great deal depending on the needs of the Advisor and the team itself, but the independent Advisor will usually receive a payout of 65-85% of their gross revenue, with some nominal expenses reducing this slightly. For example, an Advisor may earn an 85% payout before paying $500 per month for rent and office supplies. Or 75% including rent, but where the Advisor is responsible for their own E&O insurance and tech stack costs. All-in, a good tuck-in should net the Advisor around 75% once production is above around $250,000.

The support of a tuck-in is ideal for breakaway Advisors, who want to own their book but don’t want to make the total leap to running their own firm. As someone who did it for 7 years, I can vouch for the fact that the marginal 10-20% an independent earns in payout pales in comparison to the added responsibility. So for many Advisors, the tuck-in becomes the final home of their practice.

On the other hand, many Advisors use the Tuck-in Solution as a stepping-stone to total independence (as I ultimately did). And the hallmark of the Tuck-in model is the flexibility to do this. Once you join the team, you will own your book of business that you bring with you and anything you add to it, and a reasonably minded Tuck-In manager will understand and support your decision to move on should that time come, and many will even assist where they can out of goodwill.

If I can answer any questions or help you in your search, call or text 919-561-2436, email [e-mail], or schedule time on My Calendar for a Zoom or phone call at your convenience.

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