Changing broker dealers is one of the most difficult decisions an advisor will make in his or her career, with the transition taking at least 12 months before everything is back to business as usual. Making the transition to an RIA can be even harder. A look by Fidelity at why advisors did or did not make the move yielded some surprising results.
The study, conducted late last year, involved 783 wirehouse advisors with more than $10 million. The advisors were grouped into three categories — “fence sitters,” “movers” and “entrenched.” Interestingly, it seems that family support — or lack thereof — played a big role.
With the RIA market growing at 13% in 2011, according to Cerulli (eclipsed only by hybrids at 19%), the conventional wisdom is that payout and access to more products, as well as growing frustration over FINRA restrictions, drives the decision to go independent. But “fence sitters,” or those who have been considering making a move over the past 12 months, make up one-third of the advisors surveyed — most of whom are not making a move because they don’t have the support of their families.
So while the security of being in a wirehouse is important to an advisor, it turns out that the support of a spouse is a big factor in making the move. Advisors are also concerned about being sued by their former BD and the percentage of clients they can bring.
With 8,500 advisors leaving the business every year and only 25% of the 13,000 annual new recruits making it, the industry is losing headcount.
And by the way, of the one-third of advisors who made a move, 9 out of 10 were happy. What about their spouses?
