Fidelity Signs Fewer Breakaway Brokers

Fidelity helped transition 120 breakaway advisers to the independent model in the first three quarters of this year, down 30 from a year earlier, according to Michael Durbin, president of Fidelity Institutional Wealth Services.

However, the assets those advisers brought to the firm remained steady at about $8 billion, which means the average assets wirehouse advisers are taking independent is up 26%.

While Durbin conceded this is partly due to improved market performance swelling advisers’ assets under management, he also said that the fact advisers with greater assets under management were going independent shows that the industry is normalizing. Whereas some advisers jumped ship over the past two years due to fears about the direction their broker-dealers were headed, now they’re doing so because it makes sense for their businesses and in order to create a meaningful succession plan, something that’s a lot more difficult in the wirehouse arena, Durbin said. Of the 120 advisers transitioning to independence, five brought with them more than $500 million apiece.

Just over half of breakaway advisers, 55%, either joined a broker-dealer affiliate of Fidelity’s National Financial clearinghouse or an existing registered investment advisor (RIA). The remainder started their own businesses. Virtually all the advisors were dually licensed; while it was common for breakaway advisors with a healthy chuck of fee business to jettison their transaction counts in the past, no advisor is willing to ditch a source of potential revenue in current market conditions.

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