A Conversation with Bill Sowell, Founder and CEO of Sowell Management on IBD Consolidation

With the ongoing consolidation in the independent broker-dealer space, advisors at firms being acquired find themselves facing a critical decision: should I stay or should I go?

Up-front forgivable loans and retention packages can be enough to keep advisors in place during a transition. In fact, when modeling out the finances of a deal, acquiring firms often estimate a 90% or higher retention rate. 

Why do so many independent advisors opt to follow the herd and join a firm they had no part in choosing, and that may not be a good cultural or operational fit?

We recently spoke with Bill Sowell, Chief Executive Officer and Founder of Sowell Management, to get his thoughts on IBD consolidation trends and the impact on advisors who wake up to the news that their firm has been sold. Bill has had a front-row seat to the evolution of the industry over the past 35 years. He began Sowell Management in 1995 as one of the nation’s first RIAs.

Sander Resler: Are advisors just following the money in the face of consolidation within the independent broker-dealer space?

Sowell: You know, it’s tempting to think that advisors are just following the money when these big consolidations happen. But in my experience, it’s a lot more nuanced than that. Money’s important, no doubt, but so is the culture and the ability to serve your clients the way you always have. Advisors I speak with are looking for something deeper — a firm that aligns with their values, not just their wallet. When the culture doesn’t fit, they’re the ones left picking up the pieces, not the big firms. 

Advisors want more than just financial incentives; they want a sustainable future, autonomy and alignment with their values. If the cultural fit is off, advisors may quickly become dissatisfied. A solid cultural alignment between an advisor and firm is essential for long-term happiness and client satisfaction. 

Advisors need to ask themselves: How will this acquisition impact my ability to serve my clients as they have become accustomed to? It shouldn’t just be about financial incentives – it’s about being able to continue the practice you’ve worked hard to build.

SR: Should advisors consider their options when IBD ownership or leadership changes?

Sowell: When ownership or leadership at an IBD changes, it’s natural for advisors to feel uneasy. It’s like when a trusted mentor leaves the firm — things may start to feel different, and not always in a good way. In my career, I’ve seen firsthand how a shift in leadership can mean a shift in values. For many advisors, this creates a sense of uncertainty. The key is for advisors to step back and evaluate whether this change aligns with their long-term goals. If it doesn’t, it might be time to consider other options. Independence gives you the control you need to steer your business in the right direction, and that’s something you can’t put a price on.

When the structure and leadership of an IBD change, advisors may lose a level of control over their business. If the IBD is evolving in a way that doesn’t fit your vision for the future, it’s essential to take a step back and look at other options that offer greater freedom and alignment with your practice.

Advisors need to ask themselves: What are my long-term goals, and does this change position me closer or farther from achieving them?

SR: What type of advisors or practices would likely succeed as an RIA?

Sowell: In my experience, advisors who are successful in the RIA model tend to be entrepreneurial, willing to take ownership of all aspects of their business, and most importantly, focused on their clients. The transition to RIA is a natural next step for those who want more control and flexibility in how they serve their clients. It’s about being adaptable, visionary and committed to building something that aligns with their values. When done right, it can be incredibly rewarding.

Advisors who are forward-thinking, entrepreneurial and adaptable are more likely to succeed in the RIA model. They need to be comfortable with change and committed to their clients’ evolving needs.

Those who put clients at the center of their business are naturally positioned to succeed as an RIA. The independence model thrives on building lasting client relationships and offering personalized solutions.

The RIA model requires strong business acumen. Advisors willing to embrace the operational side of the business, from compliance to marketing, will find more success.

Advisors need to ask themselves: Are you ready to transition from being an advisor in a system to taking full ownership of all aspects of the business?

Sander Ressler is Co-Owner and Managing Director of Essential Edge Compliance Outsourcing Services, LLC, a strategic consultancy specializing in compliance and regulatory affairs for broker-dealers and registered investment advisers (RIAs).