By 2019, 72% of wirehouse advisors who say they have a retention contract at their current broker-dealer report that their contracts will expire, according to a recent report from Cerulli Associates. Cerulli expects about half of wirehouse advisors surveyed to make intra-channel moves and nearly one-quarter to adopt some form of independence (in 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. “[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 explains.
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. But the research suggests that there is some hesitation for these advisors to embrace complete independence and start a firm on their own.