B/Ds, RIAs Focused on Hiring in 2011

Seventy-five percent of U.S. broker/dealer (B/D) and independent registered investment advisory (RIA) firms are planning to hire in the next 12 months. 

According to a poll from Fidelity Investments, the primary staffing objective of B/D and RIA firms in 2011 is to recruit new advisers/brokers that have existing books of business (43%), followed by those who plan to mentor and help existing staff transition to a broker or adviser role (19%).  Nearly one-third (32%) of B/Ds and RIAs say that ongoing industry consolidation has made it easier to recruit, while 62% say it has had no impact.

“A strong focus on recruitment, especially as a component of a broader client acquisition strategy, is extremely good news for the industry and speaks to an overall confidence for its continued growth and success,” said Scott W. Dell’Orfano, executive vice president, sales, Fidelity Institutional Wealth Services.

Adding new clients is still the primary driver of profitability this year (60%), a 17 percentage point increase over 2010. Firms expect adding new brokers and advisers will be their second biggest driver of profitability at 21%, up from 14% in 2010.  While B/D and RIA firms see client acquisition and broker recruiting as their two biggest drivers of growth in 2011, these are also their top two areas for concern this year.

“There is no doubt money is in motion, whether from investors moving firm relationships or brokers and advisers going independent and bringing client assets with them,” said Bobbi Masiello, executive vice president, relationship management, National Financial.   

The Fidelity poll also explored succession planning and found that more than half (53%) of B/D and RIA firms do not have a long-term succession plan for their business in place. Thirty percent state they have an agreed upon succession plan to pass their business on to senior team members, while 15% are currently exploring opportunities with a potential merger partner.   

The poll was taken of firm executives at approximately 335 B/D and RIA firms, most of whom are clients of Fidelity’s custody and clearing units.