Financial advisors are on the move, or are thinking about it, Fidelity Clearing & Custody Solutions said Wednesday in releasing results of its third biannual study on advisor movement.
Fidelity noted that some 34,000 financial advisors moved to other firms in 2014. It surveyed 692 advisors from a variety of channels with at least $10 million in assets under management.
The new research found that movers, defined as advisors who had switched firms in the past five years, tended to be younger than in the 2013 study, were more likely to be women and had clients with higher assets. Nearly a third of advisors moved for the first time within the first four years of their careers.
Among the movers, Gen Y advisors represented 43% of advisors with $250 million or more in assets under management, compared with only 14% in 2013. This means more business is at risk with these young and early movers, Fidelity said.
“We’ve been telling firm leaders that they need to go beyond viewing this trend as a threat,” Bob Oros, head of the RIA segment at Fidelity Clearing & Custody Solutions, said in a statement.
“Instead, let’s try to understand the motivations of these advisors, particularly the younger ones, so that this becomes an opportunity for firms to gain insights into how to attract new talent and retain their existing work force.”
Moving Toward Independence
Fifty percent of those who moved to a new firm chose a registered investment advisor or independent broker-dealer, and many of the movers came from banks and wirehouses. They said they wanted more control over daily operations, the ability to focus on clients and more leeway to develop and implement investment strategies.
Financial motivations remained a chief reason to move, but a less important one than in the past. Thirty percent of movers said they left a previous firm in order to achieve a better work-life balance, compared with 21% in the 2013 study, and 15% said they wanted more control over their practice, versus 8% in 2013.
How has this worked out for those who moved?
Ninety-two percent said they were happy they had done so, 80% said they were better off financially and 67% reported job satisfaction — a huge jump from the 8% who said they were happy before the move.
Movers in the study who had been with their firms for three to five years experienced, on average, a 59% increase in their assets under management, from an average of $105 million to an average of $167 million.