It’s a boom time for financial professionals who want to leave wirehouses, start firms or work at a place where they have more control. Advisors say they are moving to independence to have greater control over their business, make more money and have better client relationships.
Those were among the results of a new Schwab Advisor Services study of independents, which was released and discussed at a meeting in Manhattan on Wednesday.
“Independence continues to be on a very strong growth trajectory,” said Tim Oden, senior managing director, business development, Schwab Advisor Services.
“In the last few years we have really seen a significant uptick in the number of advisors who are considering independence,” he added, pointing to the study.
“New firms registered with the SEC in 2017 represent $84 billion in assets under management,” according to the study. This represents a 59 percent increase in new registrations since 2013, Schwab officials said. There has been a 20 percent increase in registrations over the last year, the study said.
Schwab officials also said they have a 41 percent market of the newly registered firms that use only one custodian. And most firms only use one.
Reps or advisors leaving full services firms and moving to some form of independence expect various benefits, the study found.
Oden said part of the success of the independent movement has been the result of clients becoming more discriminating and sophisticated. They are likely to look up the records of prospective advisors, he said. Oden added that they are starting to understand that independents are fiduciaries who “are looking out for their best interests.”
An independent advisor official said control over the product menu is a key reason why he switched.
“We all came from big banks and brokerage and we now have no (proprietary) product to sell,” said David Jumper, with HPM Partners, in explaining why he went independent
“Most advisors expect to receive some form of equity when joining a firm---either immediately or over time,” the study said.