Brokers Are Attractive Recruiting Targets For RIAs, Schwab Survey Indicates, But Fee-Only RIAs Face A Disadvantage In Luring Them

Tuesday, February 28, 2012 17:43
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Brokers Are Attractive Recruiting Targets For RIAs, Schwab Survey Indicates, But Fee-Only RIAs Face A Disadvantage In Luring Them

Seventy percent of brokers not affiliated with an RIA say their clients would follow them if they left their firms, according to a survey of brokers by Schwab Advisor Services, and 78% of the brokers interviewed say clients are loyal to them personally, while just 22% said the client’s loyalty was their firm.

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The survey results are based on interviews conducted December 3 to 18, 2011 by an independent research group with 201 brokers. All of the brokers surveyed reported that they manage at least $10 million in client assets, have been a financial advisors for at least two years and do not work for an RIA.  
 
According to the survey results, 77% of the brokers polled said they would likely pursue an overture from a recruiter contacting them on behalf of an RIA.
 
 
The survey results indicate that brokers could provide an opportunity for growth for RIAs who can successfully recruit these advisors, many of whom responded to the survey with answers that indicate they could be good target for RIA recruiters. 
 
Schwab’s survey reported that 48% of the brokers interviewed agreed with the statement that they have less job security than they used to, and 45% of the brokers reported that morale had worsened at their firm over the past five years. Nearly a third said their income potential had worsened over the past five years.
 
Fee-only RIAs would seem to be at a disadvantage in recruiting brokers, the survey’s results indicate.
 
 
The brokers surveyed, in aggregate, reported that 44% of their current income is generated by asset management fees and 44% of their income is derived from commissions, with 12% of their income coming from “other” sources. With 52% of the brokers said they would “keep at least some commission-based business and another 19% said they would “keep all their commission-based business.”

 

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