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March 14, 2018 at 02:20 PM
More money, fewer problems? Most advisors say they have increased their revenue since going independent. They also say they’re happier, according to a new study from Charles Schwab.
Schwab’s Independent Advisor Sophomore Study aims to understand the motivations, mindset and experiences of financial advisors who have recently made the transition to the independent model (or as Schwab considers them, “sophomores”).
The online study, which was conducted from Jan. 17 to Feb. 5, was sent to 696 advisors, drawn from Schwab’s client database, and received 67 completed responses. To qualify for the study, advisors must have started or joined an existing independent investment advisory firm in the past seven years.
According to the survey, most advisors have increased their revenue since going independent. The survey finds that 70% of respondents said their revenue had increased, whereas 15% said it had remained the same and 15% said it had decreased.
This is perhaps not what wirehouses would have their advisors believe, according to Shirl Penney, president and CEO of Dynasty Financial Partners.
During a press briefing in New York to discuss the study results, Penney said: “I think the wirehouses do a really good job of pouring a lot of Kool-Aid frankly down the throats of advisors about independence being a guy or gal working out of a basement and they’re one step away from being put out of business. And obviously that’s not the reality.”
According to the survey, banks, brokerage firms and broker-dealers are the biggest springboards to independence. Half (51%) of survey respondents said the firm they last worked for prior to becoming an RIA was a full-service bank or brokerage firm (e.g., Merrill Lynch). Meanwhile, 40% said they’d been at a national, regional or independent broker-dealer (e.g., Raymond James, Ameriprise, Edward Jones).
The advisors that have become RIAs show no regrets, according to the survey. The survey finds that nearly all advisors (96%) said they would make the decision to go independent again and are happier now as an independent advisor (93%). A majority (66%) also said they should have made the decision to go independent sooner.
As Penney said, the percentage of advisors that go back to wirehouses is close to zero.
“Nobody in this room has written a story on ‘break-back brokers,’” he said to the room full of press. “It just isn’t happening. All roads are leading this way.”
