The majority of brokers and advisors see the independent model—registered investment advisor, independent broker-dealer or dually registered—as more attractive today and offering the greatest earnings potential, according to Fidelity Investments’ latest Broker and Advisor Sentiment Index survey.
The survey, released Thursday, found that among brokers and advisors, more than half (56%) indicated that the independent model had become more attractive in today’s economic environment, while nearly 70% expected the independent model to offer more earnings potential than any other business model over the next 18 months. Among the 18% who believe the independent model is less attractive, the No. 1 reason is because of the expected costs of complying with impending regulations.
“From new regulations to changing investor attitudes and behaviors, it’s clear that the market downturn of 2008-2009 has had significant and far-reaching implications on brokers and advisors,” Sanjiv Mirchandani (left), president of National Financial, a Fidelity Investments company and the nation’s second largest clearing provider, said in a statement.
“Yet, despite these growing pressures, we were encouraged that brokers’ satisfaction jumped, something that we believe is a reflection of their resiliency, flexibility to meet new challenges and continued focus on meeting the increasingly demanding needs of their clients,” continued Mirchandani.
The independent segment continues to gain in popularity in terms of headcount and assets. According to the Fidelity survey, 17% of brokers have switched firms within the past three years. More than two-thirds (69%) of recent switchers say they joined an existing firm, with the largest percentage choosing an independent broker-dealer.
Among these “switchers,” the top three reasons for moving to another firm are: “unhappy with changes in the firm’s direction,” “wanting more independence” and “wanting a better