Most financial advisers base their decision to leave or go to a new broker/dealer firm on culture (24%) — a broad term that can describe a wide range of factors, from impending mergers to frustration with other business units. It could also have to do with a negative event that caused dissatisfaction, says The Cerulli Edge—Advisor Edition Recruiting Issue.
The importance of culture is increased at independent B/D firms. Large wirehouses must be able to support a wide range of personalities, but at smaller firms it is more crucial for the adviser’s personality to be aligned with the organization.
Literal location and where an adviser is in his career are two factors in making a firm a cultural fit. Geographic differences include a midwestern adviser liking things more slow-paced, and a northeastern adviser enjoying a faster pace, Cerulli notes.
Mergers and acquisitions are the greatest factor in culture, the report says. Advisers working in small, regional firms do not always look fondly on being merged with a large, multinational firm. The report cites the example of the Merrill Lynch-Advest merger, in which Merrill lost about 400 of Advest’s 500 advisers.
Desire for Independence
The Cerulli data show 20% of advisers cite “increased independence’ as a primary reason for switching firms. Overall, increased independence is a long-standing reason to switch B/D firms. Nearly two-thirds of advisers say they want to go to a less restrictive channel, the report says.
However, a “less restrictive channel’ does not necessarily imply leaving a wirehouse to join a registered investment adviser (RIA) firm. In fact, most advisers leaving national full-service firms go to another national full-service firm (48%), followed by an independent firm (24%) or another channel (23%). Only 4% go to an RIA.
The report also says 13% of advisers cite “business support’ as the primary reason for switching firms, and 10% cite “senior management vision.”
The data show that two-thirds of advisers take all or most of their clients with them when switching B/D firms.