25% of Wirehouse Advisors Expected to Go Indie by 2019: Cerulli

The majority of wirehouse advisors indicate that their retention contracts will expire within the next five years, according to global analytics firm Cerulli Associates.

By 2019, according to a new report from Cerulli, 72.2% of the wirehouse advisors who indicated that they have a retention contract at their current broker-dealer reported that their contracts will expire.

And, just as The Clash sings, many may be asking themselves, “Should I stay or should I go?”

Cerulli expects approximately half of wirehouse advisors to make intrachannel moves, and nearly one-quarter to adopt some form of independence (in the independent broker-dealer, RIA or dually registered channels).

“Advisors who moved within the past three years cite the desire for greater independence as the most important factor influencing their decision to switch firms,” the report states. “Recruiters relay to Cerulli that more advisors are at least considering independence, and it is easier to make the transition as retention deals approach expiration, because they do not have to compensate for their initial upfront payout.”

Cerulli finds advisors are enticed by the independent model, compensation, greater autonomy, value and a more personable culture.

As part of its report, Cerulli also talked to recruiters.

“[A] recruiter shared that ‘[those] folks who truly go RIA are tired of big firms, tired of employee model, [and] want a non-conflicted type of environment.’ He added that those who do move are rarely unhappy with their decision,” the report states.

According to Cerulli, 55% of advisors who have been working at their current firm for three years or less cite the “desire for greater independence” as a major factor to switch firms.