Trends in advisor career moves changing
More advisors are moving as teams and more have joined an established firm rather than starting their own. But those aren't the only trends.
A transformation in the financial services landscape means that the industry looks very different than it did just five years ago.
But advisors are still on the move from firm to firm, albeit with differing motivations and amid different pressures.
So says a report from Fidelity Investments, which highlights changes including regulatory shifts, industry consolidation and firms exiting the broker protocol as influencing the changing reasons that advisors move compared with why they might have done so only a few years ago.
In 2012, the report says, 20 percent of advisors were concerned about compliance and regulation; by 2017, that had risen to 49 percent and now 76 percent of advisors feel that the industry is heading toward an “all fiduciary model.”
In 2006, it adds, there were 1,508 broker-dealers; by 2016, that had fallen to just 1,070—an approximately 30 percent decrease.
And while 75 percent of advisors are cognizant of recent news of firms leaving the broker protocol, 89 percent of wirehouse advisors are aware of it.
That’s generated its own wave of change, with nearly half of advisors saying that long term, firms that stay in the protocol will be more attractive to advisors considering switching and more than a third believing that firms departing the protocol will suffer detrimental effects.
And when it comes to advisors considering jumping ship, 44 percent say firms’ actions concerning the broker protocol will affect their ability to bring clients with them, 30 percent say they’d expect a lower recruitment bonus to help offset any legal costs and 38 percent will vet firms that will help protect them through the switch.
Among advisors seeking greener pastures, the report finds that independent broker-dealer and registered investment advisor channels are their top destinations. Among the 56 percent of advisors who have moved or considered moving in the past five years, 23 percent have gone through with it or are in the process of doing so, citing a desire to grow their practices, to work independently and to be able to provide conflict-free advice among the reasons for their moves.
Among that same group, 17 percent decided to stay where they are, and 17 percent are still seriously considering moving. They’re still undecided because of the regulatory atmosphere surrounding the Department of Labor, or are concerned about protection if something about the move goes wrong or the need to have assurances that clients will follow them to their new home; other factors include money and the need for transitional support.
Those who haven’t left—the 44 percent who haven’t considered it in the past 5 years—are happy where they are, don’t want to put in the extra hours they might have to work in a new place and aren’t thrilled at the prospect of having to market themselves and pursue new business if the move required them to.
But more advisors are moving as teams (almost 47 percent who moved were part of a team), and taking more assets with them when they go; more are choosing independent channels (64 percent in 2017, compared with 40 percent in 2012); and more have joined an established firm rather than starting their own or joining a startup (80 percent in 2017, compared with 67 percent in 2012). And in a clear signal of the online trend, 48 percent are e-advisors, compared to 40 percent of e-advisors in the advisor population overall).
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