Around the time that the financial and markets crisis climaxed with government bailouts and big bank takeovers, many observers predicted that the independent advice business would see its ranks swell by the phenomenon of the breakaway broker: wirehouse brokers, scarred by bad press and resisting the push to sell proprietary product, would embrace the independent model in droves.
It didn’t happen, though there was plenty of tire kicking that went on. However, Craig Gordon, the RBC Wealth executive who provides guidance to existing RBC advisors and recruits independent RIAs and brokers to affiliate with RBC, says that he believes the market for independence is turning.
In an interview during the Financial Planning Association’s annual conference in Denver on Oct. 11, Gordon, director of Correspondent and Advisor Services for RBC Wealth and a former Fidelity Institutional Wealth Management executive, argued that while there may not have been a flood of wirehouse brokers choosing independence, there has been a sea change in those brokers’ perception of the independent model. Rather than denigrating those who choose independence as brokers who couldn’t make it in the big time, those brokers now see the RIA or independent broker/dealer path as an appropriate choice for the successful broker.
“It’s acceptable now to be a boutique,” Gordon said. “The perception has changed in the wirehouses,” he said, where many brokers are “disenchanted with the status quo.” RBC, Gordon suggested, is benefiting from that new perception in its various business models—in both its employee broker operation and in its fledgling business custodying independent RIAs’ assets.
(In late September, RBC announced it had hired a new team of senior relationship managers.)
Perhaps fledgling is the wrong descriptor, since by acquiring the former Bear Stearns RIA custody business from JP Morgan (the deal closed on June 15 of this year), RBC has jumpstarted its RIA initiative.