Just over three-quarters—76%—of advisors who have recently shifted to an independent business model say they're better off financially, according to a new study by Fidelity Investments. And 64% of those who say they're better off were better off within six months of their move, according to the study.
The study is one of the first formal attempts to examine the transition process, Fidelity said in a statement.
"We felt it was important to do a study like this," because there wasn't anything like it available, said Michael R. Durbin, president of Fidelity Institutional Wealth Services, Fidelity's RIA custody unit. Fidelity wanted to "survey those who have made a move to independence over the last five years, explore their experiences, thought processes, how they experienced the transition itself." And, he said, Fidelity also wanted to answer a broader question: "How have they done in independence?"
More than half (54%) of those who made the leap to independence did so of their own accord, without being influenced by others. And 80% made the switch on their own (the other 20% moved as part of a team).
Advisors who went independent didn't lose many clients, either, the study found. About 86% of the newly independent advisors said all or most of their clients moved with them. "One of the most rewarding parts of our transition to independence was the reaction from our clients," said Greg Erwin, co-founder and partner of Sapient Private Wealth Management.
Fidelity and Cogent Research surveyed 173 advisors in September and October 2011. Moving to an independent business model was defined as: joining or starting an independent broker-dealer, joining an existing RIA firm, starting an RIA or joining or founding a corporate RIA arm of a broker-dealer firm. The minimum book of business for advisors was $10 million in AUM. The study did not identify Fidelity as the sponsor.
Danielle Reed writes for Financial Planning.
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