Advisors prefer independent business models, Fidelity finds

Firm launches Independence Hub to help educate those advisors making the transition to independence.

It appears that more advisors are making the move to go independent — and there’s no sign of that trend stopping.

New Fidelity Investment research found that approximately 1 in 6 advisors have switched from a corporate firm to go independent over the past five years. Additionally, advisors cite independent business models as the top destination, with 94% of advisors saying they’re happy with their decision to move and 85% saying they feel more in control over their future.

Rohit Mahna, head of client growth at Fidelity Institutional Wealth Management Services, said the findings suggest advisors might be better informed than before and want to put their clients first, as they always have.

“They’ve got access to Google and things online and different social networks,” Mahna said. “So their aperture of knowledge has grown. We’re seeing many teams and advisors looking to go independent so that they could be better aligned to meet the needs of clients.”

Advisors may prefer independence and the benefits that come with it, but a lack of knowledge may be preventing them from taking that step. The most notable concerns found in the research were fear of the unknown (60%), client attrition (48%) and time spent transitioning versus managing the practice and their clients (35%).

To help address concerns related moving to an independent model, Fidelity has launched a resource, Independence Hub, which aims to help advisors navigate the decision-making process, educate them on leadership, and provide next steps and suggestions on their independence journey.

The hub offers an RIA valuation tool that helps advisors understand the potential economics as they go independent. Mahna said Fidelity sees the hub as a living and breathing thing.

“That hub, based on feedback, will just get enhanced and will grow more and more,” he said. “We want to make sure people feel very empowered that they could drive their own discovery process on their own when they’re online.”

Mahna added that he hopes advisors who are looking to go independent will consider Fidelity as a resource.

“We want to be the right destination point for firms or teams that are looking to go independent, but again, very much based off what their needs are,” he said. “We want to be the right destination point based on what their need is.”

Among the factors influencing an advisor’s decision to move, top considerations include compensation (51%), better firm culture (50%) and the ability to provide a higher level of client service (39%).