Evaluating Your Affiliation: The 5 Most Critical Factors for Advisors

In this episode of The Rare Advisor, Aaron Grady welcomes back Steve Phillips, Chief Practice Management Officer at USA Financial, for a deeper dive into a topic that has become increasingly relevant in the financial services industry: how to properly evaluate your current or future affiliation as a financial advisor. Their prior conversation touched on building an ideal life and practice, and within that dialogue, they briefly discussed the role of affiliation. However, given the scale of industry consolidation, merger and acquisition (M&A) activity, and movement among advisors, they recognized the need to unpack this subject more thoroughly. 

The discussion starts with the foundational question of control and flexibility within an affiliation. For many advisors, the original appeal of entering the profession was autonomy—the freedom to run their practice on their own terms, create a unique brand, and serve clients in a manner that aligns with their values. In other words, being an independent financial advisor. Steve and Aaron stress that the first and perhaps most important factor to evaluate in any affiliation is whether it enables that autonomy. This includes freedom in choosing investment platforms, custodians, planning tools, and the ability to operate as a fee-only, commission-based, or hybrid advisor. Furthermore, does the firm allow brand autonomy, or does it force advisors into a one-size-fits-all corporate identity? In an industry that has historically prized independence, preserving flexibility is key. 

Next, the conversation transitions to compensation and economics. Steve and Aaron acknowledge that advisors run businesses and compensation is critical. Advisors need to closely evaluate payout structures, fee transparency, and whether the economics of the affiliation are aligned with long-term value creation. Transition assistance, such as forgivable loans, is another area they caution advisors to inspect thoroughly. While upfront checks can be attractive, they often come with hidden clauses and strings attached that may limit flexibility or come at the cost of future business value. They emphasize that advisors should be clear on whether the affiliation allows them to maintain equity in their practice and whether the platform enhances enterprise value or slowly erodes it. 

Third on their list is compliance and oversight. This is a topic that often creates friction, especially among entrepreneurial-minded advisors who don’t like being told "no." But Steve reframes compliance as a form of protection—something that exists to help advisors avoid future litigation and regulatory trouble. A good compliance team, he argues, works with you, not against you. At large firms with thousands of advisors, compliance often becomes a faceless entity focused on scale, leading to impersonal or rigid enforcement. In contrast, a smaller affiliation allows for meaningful relationships with compliance professionals who can provide context, explanation, and collaborative solutions. This relational dynamic is critical for advisors who want to innovate while remaining within regulatory bounds. 

Technology and operations come next in the hierarchy. The duo highlights how crucial a firm’s tech stack for advisors has become in today's advisory landscape. Advisors must evaluate whether their affiliation offers integrated tools for CRM, trading, financial planning, client reporting, and more. Are these tools interoperable, and do they offer choices for third-party integrations? Furthermore, does the affiliation provide operational support—real people you can speak with when there are issues related to billing, onboarding, or service? Aaron underscores the importance of back-office support that feels like a true extension of the advisor’s team. Technology is no longer a bonus—it's a necessity, especially for firms looking to scale, create efficiencies, and provide a modern client experience. 

Finally, they land on what both consider the most overlooked yet vital component: growth and practice support. Unlike operational support, which deals with day-to-day needs, practice growth involves the strategic planning and resources required to expand and evolve. Steve argues that many affiliations check the boxes on the first four areas, but fail when it comes to proactively helping advisors grow their business. Whether it’s lead generation, branding, event support, succession planning, or team development, a strong affiliation must invest in the advisor’s future. Steve also raises the point that real coaching requires asking the right questions—often ones that advisors aren’t asking themselves.  

Questions like: “If you could accomplish just one meaningful thing in the next 6 to 12 months, what would it be?” That answer often reveals an area of urgent need—hiring, process development, classification of clients—that growth support should aim to resolve. 

Aaron and Steve reflect on how this kind of support is rare, especially at large firms with tens of thousands of advisors. They explain that when an advisor becomes a “C client” in the eyes of their affiliation, it becomes difficult to have a voice or receive personalized attention. Advisors should ask themselves if they are truly being heard, and whether their goals and values are being supported. Growth support, they argue, requires an organization that is small on purpose—not lacking in tools or infrastructure, but intentionally structured to provide high-touch support. 

The conversation circles back to the broader idea of the advisor lifecycle. Aaron references the common trajectory of a practice: initial acquisition and growth, followed by scaling through staff and systems, and ultimately preparing for succession or sale. Each phase demands different types of support. A good affiliation must not only understand this but have the ability to adapt and walk with the advisor through each stage. Steve notes that many large organizations simply aren’t built to tailor their approach to individual advisors—they rely on best practices and templated solutions. While those may work for some, they’re not ideal for every advisor. 

As they wrap up, the two reinforce that evaluating your affiliation is not just about chasing the biggest payout or the flashiest tech. It’s about alignment. Do you have the freedom to run your business the way you envision it? Do the economics make sense for the value provided? Are you protected and supported by a compliance team that knows you? Is the technology working for you or against you? And most importantly, does the affiliation have the time, interest, and resources to help you grow—specifically, not generically? 

They urge advisors to take stock of where they are and what they need, whether they’re at the beginning of a new journey, in the midst of expansion, or preparing for legacy. At the heart of it all is the idea of “fit.” Not every model is wrong. But not every model is right for you. If you want personalized attention, high-touch growth support, and a voice in your future, you must choose an affiliation that prioritizes those things—and be willing to ask the hard questions to find it. 

Aaron closes the episode by thanking Steve and encouraging advisors to keep their “why” in clear focus. When you’re clear on your why, the how becomes much easier to execute. In today’s fast-evolving advisory landscape, choosing the right affiliation might just be the most important business decision an advisor can make. 

TRANSCRIPT

Aaron Grady, Advisor Consulting Director at USA Financial -  Welcome back to another edition of the Rare Advisor. I'm your host, Aaron Grady, and with me again is my friend, mentor, and traveling companion, the Chief Practice Management Officer at USA Financial, Steve Phillips. Thanks again, Steve, for stepping in and helping.

Steve Phillips, Chief Practice Management Officer at USA Financial - Well, thanks for having me back, brother. Always, always, always. I don't think I get invited at least two in a row. This is great. We just really need to just keep it rolling.

Aaron Grady - Hey, we got to save room on the bus for a few other people as well. So the reason I asked you back today is in our last rare video, we were talking about the idea around building the ideal life or the ideal practice. And through that conversation, we identified a lot of important factors for key elements that should be really weighed when building an ideal practice, ideal clients, ideal practice size, ideal strategic partners, and then ideal affiliation.

Steve Phillips - Mmhm.

Aaron Grady - But it was that last part that really kind of spun us off into a little deeper conversation, which we didn't really get to spend time with. I think it deserves the attention that it does, especially with all of the, as you said in our last video, all the M&A that's going on, all of the consolidation in the industry, all of the movement that's going on. It makes sense that if advisors are out there right now and they're considering affiliating with a new organization, maybe thinking about M&A changes, maybe they're just looking to affiliate, you know, evaluate their own current affiliation, you know, whether it's a broker dealer, an RIA, what have you, there's a handful of things that I believe strongly in that need to be weighed. And so I would probably say the five most important factors every financial advisor should be evaluating when it comes to the affiliations of their practice and broker dealer RIA. And so that's why I asked you back today. And so today, I really want to kind of lean into that. But in fact, let's just jump in. Let's start talking about what these all are. And so here's in somewhat of an order of importance, let's start with some of the basics. So probably number one, I would say for any advisor is when you're evaluating an affiliation, you need to make sure that there is control and flexibility. And when we talk about control and flexibility, let's talk about investment platforms. Do you have the freedom to choose your products, your custodians, planning tools that best serve your clients? Do you have business model alignment with that firm? Can you operate your practice the ways that you want to, whether it's fee only, hybrid, commission based, advisor as money manager, the structure that you want, do you have the flexibility? And then brand autonomy. Are you able to market under your own brand or are you required to become part of the family or the firm identity?

Steve Phillips - And have those two things not become a big thing here in the recent past as some of these big mergers and acquisitions are going on.

Aaron Grady - Well, we've seen that to go in the other direction too. We see, you know, a lot of advisors started out in the industry under some of the big wire house brands and they left, some because they wanted the freedom and the flexibility to be able to have their own brand identity, be able to create their own process identity for their clients. And so there's power in having a mothership, big brand to hang over your door on the door to your office. But I think the freedom, which is why most advisors got in this business, is for the flexibility of schedule, freedom, and the income, I think is important. So income is a good segue to probably the number two, I would say, is compensation and economics. So this is important. These are businesses, Payout structure, what percentages of revenue are you retaining? How transparent is it? Fee compression, hidden costs. What are the administrative fees, custodial compliance fees? Are they eating into your margin? Wait against what values are they bringing to you? So, hey, if you're gonna charge me, that's fine, but how does that support me? And then here's a big one, especially with all the movement in the marketplace right now, transition assistance. Are there forgivable loans? Are there incentives? Here's the other key thing. When we talk about forgivable loans, there's the hidden gotchas in there. What strings are attached? Because sometimes I've heard some of these horror stories where, oh yeah, they gave me this check, but what was the element of it? What was the back end side of things that maybe I wasn't aware of? And then how do they help me in that transition of my clients? So that I would probably say is the next important compensation economics. And I guess tied to that with the economics, and I don't want to do a disservice here. Does the platform allow you to build value that you can eventually monetize? When you make that transition, do you still own some or all of your business? Or are you giving it all up? Now, look, I'm not saying that's necessarily bad. Some people are looking for an early exit and so they're ready to basically hand over the keys. They'll stick around for a little bit. But that's more of a succession situation. What I were talking about is affiliation. If you're if you're joining another organization. So then number three, I would say, would be compliance and oversight. me be real careful right here. I've got some friends in the compliance department and I just want to make sure that we say that we're all happy and you know, thing with compliance is this and understanding that we are dealing with advisors that have client facing responsibilities. Sometimes there are issues that run counter to what compliance wants or needs you to do. What I would say is this, advisors need to look at compliance through this lens. If what compliance is asking you to do is to protect you and protect you from yourself, because sometimes we get out over our own skis, then great. It's, it's when you feel that it's working against the opportunity for you to continue to grow and develop your business. That's where, you know, if it's so restrictive that you can't, that's an issue. But I would say most good compliance teams and oversight is designed in a sense to make sure that everybody can continue to do their business today and in the future without the opportunity for litigation, know, bigger regulation coming in. So, know, regulatory control, supervision, those things are all important when it comes to your business. So that's definitely something.

Steve Phillips - Well, I think some of that too goes hand in hand. You're right about compliance. mean, that's goes hand in hand with what we're seeing in our industry. Mergers, acquisitions, bigger, more advisors, all this. mean, there's a reason for it.

 Aaron Grady - Yeah. You know, and I understand in general compliance runs counter to and financial advisor just because, I built my own business. I want to be my own boss. And now I answer to somebody else. Well, you're not answering to someone else. You've got someone else that's protecting you because they're always looking out for, you know, keeping you inside the guardrail so that you don't expose yourself to something that's going to get you in trouble.

Steve Phillips - Here's a little peek into the future of our little conversation here. And I'd say this about compliance. And again, it's funny because you do make me think about things and keep my pen handy and write stuff down. I think that's one of the traits of the big mothership, 30,000, 50,000, 100,000 advisors and the smaller ship like what we have. Because I would say legitimately that our compliance team gets to know our advisors. good, bad, or indifferent, I think it makes a difference. It's kind of hard to have a relationship with a compliance department that's trying to do that for 30,000. Let's call it what it is.

Aaron Grady - I love that you said that Steve. It brings me back to a conversation I had with an advisor not too long ago where they were like, look, I can take a no from compliance. If it's followed up with a why it's a no. No, without an explanation, sometimes leaves people in the lurch and the beauty of having a compliance team that you can get to know, they have the time to be able to have a conversation. It's not just a rubber stamp.

Steve Phillips - Yeah. Yeah.

Aaron Grady - Nope. And then on to the next thing.

Steve Phillips - The other thing too about certain, I mean, I think this is true of our compliance team is that typically a compliance issue has something to do with another team or another department or something that, and so being able to collaborate there, a big deal.

Aaron Grady - So I would say probably the number four, so whereas we round out our top five, I know you love the top five list or maybe that's just the top five list, top 10, would be technology and operations. And look, we are in an AI driven industry, which actually kind of pivots back to compliance and how does compliance see AI. But when we're talking about technology and operations, it's now more than ever, practices are trying to operate more efficiently.

Steve Phillips - Mm-hmm.

Aaron Grady - Leveraging technology. And so what does the tech stack look like? Do they have a CRM? Do they have portfolio management? Do they have trading? Do they have financial planning tools that integrate? Do these things all talk to one another or can they be? Or if they don't have direct integration, do they have a list of options of other tech solutions that you can bring into play? Or do they partner with other industry leading third parties that can bring best in class solutions to you. So tech stack support, operational support, technology and operations. Is there a back office support? Is there somebody that I can actually talk to on the phone, a real live person, to help with account opening or billing or service or training? Or if I've got an issue, will help stand in the gap with me to resolve these issues? And then lastly, when we think about technology and operations, client experience tools. Can you deliver a seamless, modern experience? For onboarding or reporting or communications, can I leverage text to communicate with my clients? So technology and operations, I would say, was probably number four on my list when I think about the things when you're evaluating affiliations, either current or future, as far as importance. But this brings us full circle to number five, which leads me back to our previous conversation, we were talking about audio life and the fourth bullet from our ideal life or ideal practice. And that was your affiliation. And what we actually started talking about on that end on affiliation is the one of this list. And I think it's missed and it's the, the idea around growth and practice support does an affiliation number five. So growth and practice support, marketing and business development, you know, does the firm Do they help you attract and retain clients through branding, lead gen and event support? Do they provide practice management support? Are there coaching programs, succession planning, team building resources? Is there a cultural fit in an advisor community? Do you feel energized by the people in the leadership? Is there a long-term vision? Are you just another face in the crowd? Right. And so I think in self-serving maybe a little bit, but I believe as a coach and a consultant, I think than a fifth one, growth and practice support. And look, no disrespect and I'm not devaluating the first four, because look, compliance is important, technology is important, support and operations is important, compensation, what do you get paid? Look, hey, it's business, so you gotta get paid. Control and flexibility to run your business, all those things are important. What I would say is, most entities have some or all of those. They can check the boxes, give them a punch, let's take a chocolate, check this. Growth and support is one of those things that I hear from advisors over and over again. This is an area that is usually where it's lacking. And I know you believe strongly in this as well, Steve.

Steve Phillips - I do. I think that it's, I think it's something that you and I probably have talked about literally for 15 plus years, back to our previous life together when we were doing speaking and coaching in the early days. And we couldn't really foresee this coming, what our industry is today, although we probably, we probably should have. And I think that that is in any industry, if merger and acquisition sort of gets out in front of itself. We talked in the last rare about, you know, that advisors will put on clients and put on clients as they're growing their practice. And at some point they get to like, my gosh, I got these many clients and how do I classify them? Who are my ideal clients? I think there's a certain element to that that goes on in the industry today with this merger and acquisition thing. And both of us, think legitimately say, because we'd have to believe this to be a coach and a consultant that's worth a darn. And that is, No model should be condemned. mean, every model works for some body. And you had mentioned here and you spent some time on our last recording together about right fit. That's what it comes down to. But my thing is, it's crazy. Did you think I'd get human nature component into one of these? Well, it's about questions.

Aaron Grady - I'm for it.

Steve Phillips - It's that simple. I think that, and I've said this too, and I'm sort of proud of this as I was building back in the early days of the advisor protocol and then working with you and Matt and Alan all these years and then obviously our acquisition and becoming part of USA Financial is that questions, they're not enough. We talk all the time about the Socratic method and one question leads to another. Sometimes, The issue that you're trying to get to is two or three questions deep. The first question around transition, moving, you mentioned support, growth and support, has to come not from the advisor that's moving, it comes from us. And I think we do a really good job of this. And there's no right or wrong answer. But the question that I like to ask, and we talk about the beginning with the end in mind. And you know what, this is an interesting industry. People retire from this industry, but typically they have to do something with the practice. If you're an airline pilot, and it's a guy that we're working with that's also an advisor, know, and if you're an airline pilot, you retire. If you're, know, in many industries, you retire. In this business, you're typically selling it. You're selling the thing in order to retire because of the nature of the business with clients and so forth. So beginning with the end in mind, I think we do a poor job as an industry. of saying what about first steps? Yeah, you know, and that's that whole thing. Every journey starts with the first step. And so the question that we ask is thinking about your transition, your move, or thinking about staying. If you can accomplish one thing in a short amount of time, and typically we'll say six months, nine months, 18 months. That's short time in our business, as you know. If you can accomplish one thing, not that gets you over the top or whatever, but that would make a difference in the next six or nine months, what would that be? And I said that in our previous recording together that that question is always answered emphatically. Advisors always know there's one thing, need to hire that next key person. We are too big, we don't have a classification process. How we greet clients and our client services, all disjointed, whatever it might be, it's very specific. And then the question is, thank you for sharing that. What is your current affiliation, your current organization doing to facilitate and promote the growth there? Pretty simple. And then just leave it. There's advisors, their advisors say, oh, they're doing plenty. Yep, we're working on this, we're working on that. Fantastic. It generates a good conversation and a meaningful one because all the things that you, those four things that lead up to, they're all part of growth and support. mean, that's what it is. That's what compliance does. That's what tech does. It's all pointing to this direction. And you give me a very specific answer as an advisor. Then I guarantee you that processes, tools, all those things are in place with a smaller organization that can focus that.

Aaron Grady - Yeah, I think, as we, you know, through the lens of evaluating your affiliation, current or future, and you're checking that you got the punch list, you're checking the box of how do I get compensated or if I'm transitioning, you know, this or do I have control of these things? Those things, again, those things are all important. But once you get past the initial, the growth and support. Growth and practice support, because you got the operational support, which is the day-to-day stuff. But growth and practice support is, it's the long-term. You always talk about the three stages of practice, and they kind of overlap one to another. We talk about the acquisition, expansion, legacy and succession.

Steve Phillips -  Yeah.

Aaron Grady -  And we've changed terminology on some of those a little bit over time, but the whole idea is still there is, you know, at some point in your practice, you're on the growth, growth, growth mode. And then you get to another point where it's like, I got to scale, scale, scale. I got to add staff. I got to expand. I got to do this, you know, really develop a business. And then eventually I got to start packaging this thing for what comes next, the value of my life's work. And I think growth and practice support from an organization that can get boots on the ground.

Steve Phillips - Yeah.

Aaron Grady - And be, can walk hand in glove with you and have the time and energy and the resources to be able to do it on a personal level, not just, hey, here's some information and take it and run with it. Here's a book, read the book. It's help you tailor something that evolves with your practice is rare. Rare, rare, rare, hey, hey.

Steve Phillips - Yeah. Yeah. Yeah, and here's the other thing too with that. Yeah, well done. Bravo, and thanks for coming. Yeah, you know, and I just jotted this down too, the whole idea of the growth expansion legacy stuff. And you know, I rail against this. I'm saying to any advisor that's watching this, you interested in our best practices without us knowing each other, without us asking any questions? That's what the first question is about. If you're trying to accomplish something, like six, nine months, whatever it might be. And further, and that's why I said this is Socratic, let's have another question. Okay, go, you know what, we have a best practice, this is how we approach this situation, we've done it for thousands of advisors, we know it's gonna work for you, it's ridiculous. Are you in grow, grow, grow? Of course, we would agree that really never goes out of style. It's one of the overlap things. Or are you, as you said, scale? The next key employee, the you know, I have to identify my ideal clients, we're creating efficiencies, we're adding processes, all that kind of thing, and then your life's work. Yeah, yeah. So that's, you know, it's back to the whole asking questions, which I will say this, without condemning any model, it is really difficult. It is really difficult for an organization that's in the tens of thousands of advisors to be able to ask

Aaron Grady - What does my ideal practice look like?

Steve Phillips - Questions of you that I want specific answers. Your practice, and that's different than the next guy's practice. Let me ask you some questions about your practice that we can address. Because we're small on purpose. With all the tools, all the skills, all the processes, all of that. That's tough to do when you get to 30,000, 50,000, whatever. Again, it's not about the model, it's about what you want. Here's one other thing that I did write down you made me think of. We've talked about client classification, too many clients, right sizing the practice. What's your perfect practice? You covered that really well in the previous rare. If you missed that, it's really good. How does it feel? Whenever we ask, you and I are doing an event together, we ask, your triple A's, your double A's, your B's, your C's, if I make a joke, don't I, when we're classifying, you're gonna get rid of your C's, and people are like, no way, they're foundational to. The question I would ask of lot of advisors out there is how do you feel about being a C now? How do you feel about being invisible now? How do you feel about being left behind now? Those aren't my words. Those are words that we're hearing. The way you feel about your C clients, we're not discarding them. It might be a one to many solution or what have you, but we honor those relationships. How many of you can make that emotional and mental and philosophical leap to go, my gosh, 15 years ago, I was that guy. And now, so again, perhaps a little overstated, but it's something that you have to think about. And to your point, Aaron, the right affiliation and who can facilitate and support the growth. So.

Aaron Grady - Mm-hmm. And speaking to the right fit, and you said it earlier, it's look, we're not saying that the models can't work. It's about what is right for an individual advisor. If you want the personalized experience, you have to find the right affiliation that makes that.

Steve Phillips - Never. Yep.

Steve Phillips - Yeah, you know, it could be as simple as this. I think any business, any industry, I think there are businesses that you and I have come across, advisors, that can do a little help or do some consulting, but they're pretty much on cruise control. Got to figure it out. You know, I mean, they're really doing, as you would say, they're doing things really, really well. They make a small tweak here or there. There's a lot of practices out there like that. And typically, those are the ones we see at the big monster shops. 30,000. If you are, and again, every time you say something, I jot it down, you make me think of something. If you're an advisor or a team that's looking to grow, that's not done yet, we're not on cruise control, we need the support, we need somebody to ask us the questions that we're not asking ourselves, then that model's not the right one. This one would be. That's...

Aaron Grady - Thank. I think another thing, and you just made me think of this as well, Steve, so thank you, is having a voice. So if you're a face in the crowd, you mentioned being a C client. If a C client goes to an advisor and is like, hey, there's something that's going on in your organization that I really need to change or I need some help with or whatever. Yeah, yeah, yeah, yeah, yeah. We'll get right on that.

Steve Phillips - Yeah. Yes.

Aaron Grady - of an organization where they have so many voices, how many can you listen to? Right? And so do you really have a voice? And you may have control, but can you really get the time, energy, and attention that you really deserve? mean, so again, it all comes back to, know, when you're evaluating affiliations, you know, the five key things you need to look at are, if we go to the basics, it's Make sure that you affiliate with an organization that gives you the control and flexibility that you desire, that the compensation economics align with the practice that you're trying to build, compliance and oversight support your practice, but don't hinder it and help you protect yourself and your clients for today and in the future. A technology and operations partner that provides you a tech stack that allows you to continue to develop well into the future and operational support that allows personalized attention and support along with client experience tools to help better provide for your clients. But then ultimately, as we said, and a little as coaches and consultants, a little self-serving for us. But it's true. mean, it just so happens that having a partner, an affiliation partner that has growth and practice management support that helps you not just grow your business, but build a practice that's designed around the ideal practice that you want to build. help you scale, help you hire, help you develop, and then help you get energized and build into a community and a leadership structure that is designed and aligned with your view of your organization, but also the future. So affiliation, it's not as easy as, chasing a big check and the check's important. We get it, but there's more to it. And so.

Steve Phillips - Well said.

Aaron Grady - With that, Steve, I really appreciate you taking the time to join me again today. It's a pleasure. And so for those of you who joined us again for another issue of the Rare Advisor, thank you for joining us today. If you like what you heard, like and subscribe. And as it's been said, when the why is clear, the how becomes easy. So never lose sight of your why.

Steve Phillips - Always enjoy it. Thanks for having me.

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The RARE Advisor is a business model supercharged by Recurring And Repeatable Events. With decades of experience coaching successful advisors, your host, along with other leaders in the industry, discusses what it takes to grow a successful practice. With the aim of helping financial professionals and financial advisors take their business to the next level, this podcast shares insights and success stories that will make a real impact. Regardless of the stage of your practice, The RARE Advisor will provide thoughtful guidance, suggestions for developing systems and processes that work, and ideas for creating an authentic experience for your clients.

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