In a new report released on Monday, TD Ameritrade reveals some common myths and realities of becoming an RIA in today’s business environment.

Here are 9 myths advisors thinking of going independent should be aware of, and the realities they should understand. 

Source: TD Ameritrade Institutional

Myth #1: My practice isn’t large enough to become an RIA

Reality: Advisors choosing to make a move span asset and production levels and typically fit an “entrepreneurial” mindset.  The RIA industry has seen a major influx of advisors either starting or joining an RIA firm.  In fact, since 2004, the number of RIAs has increased 38 percent, while the number of fully affiliated (wirehouse) advisors has decreased by 16 percent.

Myth #2: The transition is too hard and I will lose clients and revenue

Reality: While moving from one firm to another firm or channel is a big commitment, most advisors have very successful transitions and client loyalty remains high. Advisors transfer over 90 percent of targeted assets when leaving their existing firm.

Myth #3: I won’t grow client assets the first year after I transition

Reality: Growth potential is high; 73 percent of advisors experienced an increase in the number and quality of referrals within their first 10 months. And RIA market share grew 35 percent between 2007 and 2011, while wirehouse market share decreased by 13 percent.

Myth #4: I will have to give up my securities licenses and commissionable business

Reality: Advisors may choose a “hybrid” model which enables them to maintain their licenses while still being independent, giving them the ability to do both fee and commission business.

Myth #5: If I go independent I may make less money and lose my retirement plan

Reality: With industry averages for overhead expenses in the 40-45 percent range, advisors typically net a 55-60 percent payout after overhead expenses, which is double the typical wirehouse payout illustrated in TD Ameritrade Institutional’s new Myths and Realities of Becoming an RIA report. Advisors also have the opportunity to build business equity that might be monetized upon retiring.

Myth #6: I will not have access to robust technology as an RIA

Reality: Industry analysts and advisors feel the technology available to independent advisors rivals what is available for wirehouse representatives given the focus on the needs of RIAs in recent years.

Myth #7: I won’t have access to a broad range of investment products

Reality: By becoming an RIA, advisors have the ability to select the products most appropriate for their clients.  Asset custodians often work with RIAs to add new investment vehicles to their product lineup.

Myth #8: I won’t be able to grow as an RIA without a big Wall Street brand-name and budget

Reality: Establishing a brand or leveraging the brand of an existing RIA has benefits as consumer preferences are shifting.

Myth #9: It will be cumbersome and difficult for me to establish an RIA

Reality: Unlike a decade ago, the resources available to advisors now are vast. Custodians like TD Ameritrade Institutional have systems, processes and people to help advisors pursue their vision for independence.