A survey released Wednesday by TD Ameritrade Institutional finds that most brokers who dream of going independent are holding off on their plans. But all in all, they’re confident that they can successfully transition to the independent RIA channel.
The share of potential breakaways who said they planned to make a move in the next 12 months plummeted to 33% in the latest survey from 55% in the fall.
Twenty-five percent of brokers who expressed interest in going independent said they planned to launch and operate their own firm. This compared with 29% who said this in a similar survey conducted in October and November.
At the same time, the new study found that many brokers were interested in joining another RIA rather than hanging out their own shingle.
Thirty-six percent of brokers surveyed said they were open to either joining an existing RIA firm as an employee or partnering with platforms that provide technology and operations support, up from a combined 16% in the fall survey.
“Though the desire to become an independent RIA remains strong among brokers, the current environment has prompted more breakaways to pursue an alternative path to independence — joining an established RIA firm,” Scott Collins, managing director of sales consulting at TD Ameritrade Institutional, said in a statement.
“For these advisors, it is an opportunity to gain the benefits of being an RIA without having to start their own firm.”
TD Ameritrade Institutional polled two groups of brokers in March and April: 130 “potential breakaways” at national, regional and independent broker-dealers who had an average of $100 million in assets under management; and 330 advisors with an average of $320 million under management who had already transitioned to the independent RIA channel either as an owner, a partner or an employee.
Although potential breakaways remain interested in moving to the independent RIA channel, the coronavirus pandemic has prompted many to put their plans on hold, according to the spring survey. Still, 40% said they were likelier to break away than they were six months ago.
“Advisors often table their own career plans and focus on clients during difficult times, so it’s little surprise they’re tapping the brakes on breaking away,” Collins said.
“We fully that expect breakaway activity will pick right back up when the environment improves, as more brokers will seek out the control, earnings potential and client-first environment of an independent RIA.”
Brokers in the study expressed increasing confidence in their ability to make a successful move, manage an independent practice and overcome challenges.