Breaking away from wirehouses pays off

Wirehouse advisers who switch to RIAs or indies enjoy a huge jump in compensation, a new study shows. But is the grass actually greener?
APR 17, 2013
Breaking away from the wirehouses has paid off handsomely for financial advisers over the past five years, according to a new study from Fidelity Investments. Advisers who went from a wirehouse to an independent registered investment adviser or an independent broker-dealer saw compensation increase 36% since 2008, according to Fidelity's second annual Insights on Independence study. Those who moved from a wirehouse to another wirehouse or from an independent shop to a wirehouse saw compensation increase 22%, and advisers who stayed put saw compensation increase 17%, according to the survey of 783 advisers with more than $10 million in assets under management. Advisers who jumped ship reported keeping about 79% of clients. RELATED ITEM Participate in the 2013 InvestmentNews/Moss Adams Adviser Compensation and Staffing Study » The biggest regret that advisers who switched firms had was not preparing for the move better, especially when it comes to the operational side of the business. “They all say they underestimated the challenge of making the move,” said Sanjiv Mirchandani, president of National Financial Services Inc., Fidelity's clearing division. “The one thing they wish they'd done differently is planned better.” Women and Generation X and Y advisers were most likely to have considered a move in the past five years without actually doing so, the study found. Still, just 37% of the so-called fence sitters reported being happy at their current jobs. Family played a key part in those advisers' staying. Almost a quarter of advisers who considered leaving but didn't said that their family didn't approve of a switch. Just 8% of the fence sitters said that their family did approve. “If you want to get a new adviser, take them and their spouse out to dinner,” Mr. Mirchandani said.

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