But RIAs still represent a relatively small slice of the overall industry pie, and their gains are too small to stanch the overall decline in industrywide head count.
And, finally, technology is helping to fuel the independence movement by providing advisors with tools to set up shop virtually anywhere. "It's easier than ever for advisors to hang out their own shingle," Waldert says.
Uncertain Times For BofA Advisors
It's been a wild ride at Bank of America. First, Warren Buffett's Berkshire Hathaway gave the bank a vote of confidence in August when it invested $5 billion in preferred shares and warrants. Then all hell broke loose in September with the executive-level shake up that included the ouster of the wealth management unit's chief, Sallie Krawcheck, followed by the bank's bombshell announcement of plans to slash roughly 30,000 jobs during the next several years. Meanwhile, the company showed its support for its advisor business when it hired about 40 "financial solution" advisors in its mid-Atlantic region to serve clients with investable assets between $50,000 to $250,000.
The company's wealth management division is one of its profit centers, but the overall upheaval creates considerable uncertainty for Bank of America's Merrill Lynch advisors. Larry Papike, president of Cross-Search, an industry recruiting firm in Jamul, Calif., doesn't expect to see a lot of departures, at least among the top advisors there, because many of them scored lucrative, long-term deals to re-up or to join the firm during the recruiting free-for-all of the '08-'09 market crisis. "Most of those advisors are locked up unless another wirehouse picks up their note," he says.
Others aren't so sure. "They [advisors] were tied down, but they met their first marker, and the more a note goes down, the more chances of them bolting before a deal is up," says Carri Degenhardt-Burke, president of Degenhardt Consulting, an advisory search firm in Jersey City, N.J.
She says a lot of advisors were waiting to see what Krawcheck would do, but she was fired before she could leave a lasting imprint. Degenhardt-Burke adds that BofA advisors are getting more pressure to cross-sell in-house products, which doesn't sit well with some of them. "They're looking for possible opportunities where they're not forced to do that," she says.
What's My LTC Plan? Nothing!
Who wants to think about long-term-care planning? Evidently, not a lot of Americans. Not surprising, considering it's not a happy topic. But according to a recent survey by insurance company Sun Life Financial Inc., there's a huge chasm between what Americans perceive their long-term care needs will be in later years and what the reality will likely be.
For example, just 36% of the survey's 1,015 respondents think they will need long-term care. But according to the U.S. Department of Health and Human Services, 70% of people over the age of 65 will require it.
And then there's the cost issue. For starters, 84% of those surveyed said they don't feel financially prepared for long-term care. The same goes for 54% of affluent respondents (those with at least $500,000 in investable assets). That's bad enough, and yet the results might be understated because the majority of people seriously underestimate the projected rise in long-term care costs. The typical survey respondent thinks average nursing home costs will jump 56% by 2030. (And somehow, 18% don't think nursing home costs will rise at all.) But current average yearly nursing home costs of $85,000 are conservatively projected to rise 123% during that time, to $190,000, taking into account the 4.3% historical inflation rate of the Consumer Price Index's nursing home component.
Nursing homes are the most expensive-and least desirable-option for most people. In that vein, 90% of survey respondents said they'd prefer to receive long-term care at home, if provided by a professional caregiver. While it's much less costly, that service isn't cheap, either. It's something that should be part of a person's long-term financial planning, but the vast majority of people surveyed say they haven't discussed long-term care issues with either their financial or legal advisor.
Among the survey's affluent advisors, 46% believe that long-term care is beyond their financial advisor's expertise. The upshot, says Sun Life, is that this is an issue where financial advisors can provide a value-add for their clients.