Advisors who are considering switching firms are facing conflicts because of the pandemic, according to new Fidelity Institutonal research released today.
While the increased use of technology makes switching firms easier and gives advisors more far flung choices, the uncertainty created by the pandemic is making many advisors hesitate, the 2020 Advisor Movement Study said.
Forty percent of the advisors included in the study agreed the industry-wide digital enhancements that have been made due to the pandemic have made it easier to move from one firm to another. The study was done in two phases, with 540 advisors included in the early phase done before the pandemic hit and 388 advisors participating in the follow up done in September.
In addition to making the move easier, nearly two-thirds of of the advisors said digitally innovative firms are now more attractive. Digital enhancements can provide firms with new opportunities to recruit talent, Fidelity said.
“Although advisors are not likely to make a final decision to move primarily based on better technology, it has grown in importance as advisors have come to recognize the benefits of digital empowerment,” Fidelity said in a statement.
Half of advisors also said that working remotely because of the pandemic has made going independent seem more feasible and 60% said working virtually broadens the pool of firms they can consider moving to.
At the same time that switching firms might be easier now, 80% of advisors noted that greater financial incentives would be needed for them to switch firms because of the uncertainty caused by the pandemic. One-third said higher compensation would be a must to make them move.
“The pandemic may prove to be a catalyst for advisors considering a move as the remote environment has, for many advisors, emphasizes the benefits of greater flexibility,” Charlie Phelan, vice president of practice management and consulting for Fidelity Institutional, said in a statement. “Firms will need to remain competitive on compensation, but this study shows that there’s significant opportunity for firms to sharpen their advisor technology story and continue to invest in new digital tools that help advisors more efficiently serve their clients.”
At the same time that advisors said there are positive aspects to working virtually, it can hurt the recruiting process. The pandemic has made it difficult to have recruits participate in in-person office visits to meet the team members and gauge the culture of the firm, the study said.
“Pre-pandemic, firm culture influenced many advisors’ decision to move, and though our research found that it’s decreased in importance over the past six months, firms still need to consider the culture factor as they reimagine how they engage with advisors through the recruiting and onboarding process,” said Phelan.