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Industry Spotlight > RIAs

Breakaway Broker Trend Accelerates

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April 12 announcement

“The majority of the brokers are establishing their own or joining existing RIAs. The remainder are joining independent B/Ds that clear through National Financial,” Fidelity Investments spokesman Steve Austin told Wealth Manager.

Fidelity Institutional Wealth Services offers an RIA platform including custody, clearing and brokerage services for RIAs. Fidelity’s National Financial offers a brokerage clearing platform for independent B/Ds.

The firm has developed tools that their transition consultants use to counsel brokerage teams who are considering a move to independence. The tools help brokers, who have decided to make a move, figure out whether the move to RIA or independent B/D is right for them. Then they can use matchmaking tools to help determine whether joining an existing RIA or independent B/D firm or forming a new firm would likely work out best. The matchmaking service can be helpful to independent RIA and B/Ds who seek to add professionals to their rosters.

It is interesting to note that the movement to the RIA model comes at a time when there is a movement toward a fiduciary standard for those who provide advice to investors, as investment advisors already do, and as required of all who provide advice to investors in financial reforms legislation passed by the U.S House of Representatives in December. Pending Senate legislation has a requirement for a study to be conducted to determine whether all who provide advice to investors should be required to do so under the fiduciary standard.

At the same time, certain wirehouse firms are reported to be paying vast sums to some brokers to stay put–tying them up for years–to try and stop the exodus.

Comments? Please send them to [email protected]. Kate McBride is editor in chief of Wealth Manager and a member of The Committee for the Fiduciary Standard.


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