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Industry Spotlight > Broker Dealers

Fidelity Poll Shows Advisors Shifting from Firm Cuts to Growth in 2010

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By Joyce Hanson

Despite continuing market uncertainty, 86% of brokers and advisors polled at Fidelity Investments’ executive forum in April said they are focused on firm growth this year and have stopped cutting costs.

In contrast, 63% of respondents in 2009 said they aimed to accelerate firm growth and profitability through building new and existing client relationships as well as adding registered investment advisors (RIAs) and brokers.

“After 18 months of cutting costs, broker-dealers and RIAs have clearly shifted their attention to accelerating growth through acquisition,” said Michael R. Durbin, president of Fidelity Institutional Wealth Services. “Not only are firms aggressively recruiting top producing brokers and advisors, but they are focused on actively wooing affluent investors away from the large wirehouse firms.”

Lingering market uncertainty remains, however. Despite their confidence about growth potential, 64% of RIAs and broker-dealers polled did not expect the S&P 500 to recover fully to its October 2007 high of 1,576 until after 2012, while the remaining 36% anticipated it happening before the end of 2012.

Still, only 2% of brokers and RIAs said that cutting non-essential costs would be the biggest profitability driver this year versus 27% in 2009, according to the Fidelity poll that drew an average of 186 respondents per question.

One surprise finding of the poll taken during the April 26-27 forum in Naples, Fla., was that only 11% of RIAs and broker-dealers believed that their clients’ biggest financial concern is to minimize taxes.

Rather than worrying about taxes, clients are thinking about the cost of retirement, brokers and advisors said. More than half, 52%, believed that investors’ biggest concerns are outliving their retirement savings, followed by 35% pointing to the recovery of losses from the 2008 and 2009 financial crisis.


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