Brokers and financial advisers looking to make more money and have more control over the type of clients they serve and the investments they recommend continued to flood the independent channel at a swift pace in 2010, according to a broker and adviser sentiment index survey conducted on behalf of Fidelity Investments.
Whether it was to set up their own shop, join another registered investment adviser or sign on with an independent broker-dealer, 56% of the 1,046 investment professionals queried said the independent model has become more attractive in today's economic climate and 70% expect that independent advisers and brokers will make more money in the next year and a half. The results were released Thursday.
"The independent channel continues to be attractive and the drivers of that trend, first and foremost, are advisers' desire to earn more compensation and to be the captain of their own ship and control their destiny," Sanjiv Mirchandani, the president of Fidelity's National Financial, said in an interview.
"One that was surprising to me was how important culture and community is for these advisers," he said. "They really care about working for a firm that has values and colleagues who share the same mind-set."
Brokers and advisers reported that on average they brought over 70% of their client assets when they did make a change, up from 61% in 2008 when the survey was last taken. The top reason given for not transferring all of their clients' assets was adviser preference, a sign that advisers and brokers taking the independent path know exactly what kind of clients they want and what types of products and services they want to provide.
"We don't ask them specifically why they chose not to bring some client assets with them," Mirchandani said. "I'm sure in some cases it's a matter of average account size. But also, I think it's really more that brokers want to spend time doing what they enjoy."
Indeed, overall career satisfaction surged to a 7.4 rating compared with 6.9 in late 2008 when the market was at or near its nadir. Most respondents said their firm's success and overall morale among brokers were the top two reasons for the uptick in job satisfaction.
And while so many brokers and advisers have bolted from the big wire houses and regional or national firms to join RIAs or independent broker-dealers, there's good reason to believe some will be on the move again soon.
Six percent of brokers surveyed said they were "likely" to switch firms this year and 17% had already made a move in the past year.
"That means that one out of every four advisers and brokers will be sitting in a new seat every four years," Mirchandani said. "That's a lot of change in the industry."
When and if it does come time to say goodbye, 81% said they'd leave their firm for an existing firm while 19% said they'd go it alone. The top reason given for leaving was "better pay" followed by "not happy with the changes in their current firm's direction."
Of those surveyed, 18% said they thought the independent model was less attractive and the top reason given was the expected costs of complying with impending regulations when the Securities and Exchange Commission, Financial Industry Regulatory Authority and all the states finally lay down some new and concrete rules.
"I think it's really a fear of the unknown," Mirchandani said. "Markets hate uncertainty and apparently advisers and brokers do too when it comes to compliance and regulation. It might not be a very big deal. For most brokers and advisers extending the fiduciary standard to the rest of their business may just be an incremental change. But no one knows for sure."
Not only are advisers and brokers enjoying their profession more these days, they're also planning on sticking with it longer than most would expect.
Whether it's a reflection of the hit their own personal retirement accounts and investments took in the economic downturn of the past few years or their awareness of the great compounding benefit of waiting to start collecting their Social Security checks, 19% of brokers and advisers said they won't retire until they're 71 or older.
