Peers Play a Big Role in Adviser Relocations, Independence Decisions

Fidelity Clearing and Custody Solutions, the division of Fidelity Investments that provides clearing and custody support to registered investment advisers (RIAs), brokers/dealers, recordkeepers and other entities, has released its latest Advisor Movement Study.

The research explores established and emerging trends in the ways advisers choose to change firms and business models—or stay put. Perhaps most important, the analysis also explores the “feelings of advisers who have switched or are currently switching firms,” whom Fidelity identifies as “movers.”

According to Fidelity researchers, more than half (56%) of advisers considered switching firms in the past five years, and nearly one in four (23%) actually made a move in that time. Notably, nearly all of those who switched (92%) say they are happy with their decisions to do so.

The analysis mirrors other recent research that shows movement to independent channels is increasing. Fidelity’s data shows RIAs and independent broker/dealers are the top destinations for movers, with 64% choosing one of these channels. This figure is up strongly from the 50% of movers measured in Fidelity’s 2015 Advisor Movement research. The study also shows that movers are now transferring more assets when they jump to a new firm, today shifting $75 million in median assets versus $37.5 million in a 2012 edition of the analysis.  

“Advisers are increasingly looking for the freedom to realize their unique visions for their businesses, and the opportunity to offer clients a higher level of customized service and advice,” explains Tricia Haskins, vice president, practice management and consulting, Fidelity Clearing & Custody Solutions. “They believe this will result in greater opportunities for growth and contribute to continued success in the future.”

Overall, movers say it is their peers who are the most influential people in their decisions to switch firms. The peer category includes advisers on their current team, former colleagues who moved or even advisers who work for the new firm. Importantly, the influence of peers is seemingly growing from an already high level, as 63% of movers identified these groups as influential to their decision in 2017, versus 50% in 2012.

“What’s more, movement as a team increased,” Haskins reports. “Almost half of movers (47%) moved along with a team in 2017, versus 34% in 2012. Advisers moving to an independent broker/dealer more often depart as a team versus other movers.”

“Articulating how a firm will support adviser teams during a move is an important piece of the recruitment strategy,” adds Charlie Phelan, vice president, practice management and consulting, Fidelity Clearing and Custody Solutions. “Fear of the unknown tends to be a significant concern when advisers are thinking about moving, so explaining how firms help support advisers during and after the transition is a critically important aspect of the recruiting process.”

Another interesting factoid in the research involved the impact of the Department of Labor (DOL) fiduciary rulemaking. While recent circuit court decisions have cast the long-term future of the rule into some doubt, Fidelity’s data shows a lot of advisers who have shifted business models or jumped from one firm to another cite the DOL rulemaking as a top point of influence.

“Regulatory uncertainty due to the Department of Labor’s investment advice rule was on advisers’ minds when surveyed,” Fidelity reports. “Nearly a quarter of movers mentioned it when describing the market landscape when they considered switching, as did 47% of advisors who had seriously considered or are still considering a move.”

These figures will bear watching as the ultimate future of the fiduciary rule comes into better focus.