Fidelity Finds That The Number Of Advisors On The Move Is Holding Steady, But They're Taking More Accounts With Them When They go Hot

Fidelity's latest triennial Broker & Advisor Survey paints a picture of an industry that's happier than it was in the lead-up to the 2008 disruptions and extremely interested in finding opportunities in the independent channel -- even if it's only because they hate what's happened to their current firms.

In all, about 6% of all advisors seem to change firms every year or are planning to switch this year. Given reporting about the industry as a game of musical chairs, that number may look a little low, but even 6% annualized churn adds up very quickly. 

The big change is that this year's breakaway advisors are taking 70% of their old AUM with them on average, as opposed to 61% back in early 2008. And many of those advisors are leaving the rest of those accounts behind solely because they don't want them any more.

That's an interesting statistic because it points to how the clients behind those accounts are more closely attached to their advisors -- and not the corporate logo on the letterhead -- than they were before the recession, and so are comfortable with following the advisor to the new firm. 

Better money seems to be the primary reason why advisors switch. But the secondary reason has changed. Before the recession, advisors jumped ship to get a taste of independence. Now, they leave because they're sick of where their old firm is going. 

That's a slight psychological shift, but it's important. In the good times, advisors moved out of ambition and entrepreneurial urges. Now, it's less of a positive jump to an idealized situation as a jump out of a bad one -- less of a strategic move and more of a strategic retreat.

Either way, more than half say the independent model is more attractive than it was three years ago, largely because they see it as paying better. Those who think the environment is getting worse for independents say it's because compliance costs are getting out of control.

There's plenty more in the survey -- the press release alone ranges from referral harvesting tactics to the long-term demographics of the industry -- but this is probably enough to chew on.

This Website Is For Financial Professionals Only