(Dow Jones) Educating brokers about the independentfinancial advisor model may be the key to growth for custodians, who safeguardclient assets for independent advisors.
To attract the increasing number of brokers interested in life beyond largeWall Street broker-dealers, major custodians Fidelity Investments, CharlesSchwab Advisor Services, TD Ameritrade and Pershing LLC offer tools andservices focused on the economics and mechanics of independent firms.
The more familiar brokers are with the concept of independence, the more likelythey are to consider a move, according to new research from Schwab. Forexample, more than three quarters of brokers who know someone who is, or hasconsidered, becoming an independent adviser find the idea appealing, accordingto a recent survey.
"The more you know about it, the less scary change looks," saidBarnaby Grist, senior managing director of Schwab Advisor Services.
In addition to online resources, Schwab also matches brokers with financialadvisors who have gone independent to get a first-hand view of the experience.Through September, 126 teams moved to an independent model with Schwab thisyear, up from 123 teams in all of 2008.
Independent advisers' market share of client assets is growing as large WallStreet brokerages' is declining, but the migration of brokers to independentfirms, though steadily increasing, may be more of a trickle than a flood,according to recent research from consulting firm Cerulli Associates.
Custodians, which also provide back office and practice management support tothe independent advisors, release a steady stream of research tracking thegrowing movement from big Wall Street brokerages to independent firms. Thesecompanies, of course, have a vested interest in the growth of the independentmarket since they charge advisors fees for their support and custodialservices. The more advisors they serve, and the more assets those advisersmanage, the more money the custodians will make.
Still, brokers are looking to custodians for information about the independentmodel.
Fidelity this week launched new online offerings to help brokers learn moreabout starting an independent registered investment advisory firm, partneringwith an existing advisory firm or joining an independent brokerage firm.
Through one component, Fidelity consultants will walk wirehouse brokers througha business model comparison that analyzes the costs, taxes and payouts adviserswould face over a 10-year period when going independent.