RIAs are killing it in 2020 recruiting

RIAs are killing it in 2020 recruiting
The numbers are way up, even as firms struggle amid the COVID-19 pandemic
NOV 04, 2020

Registered investment advisers have racked up impressive personnel gains in 2020, even as firms continue to struggle to operate at full steam amid the COVID-19 pandemic.

According to data compiled by InvestmentNews Research, RIAs over the first nine months of 2020 saw a net gain of 931 financial advisers who have jumped from one firm to another, the most for any of the eight business channels that InvestmentNews Research tracks. And this comes as RIAs buy other RIAs at a blistering pace.

That's down a bit from last year, when RIAs had a net increase of 998 advisers over the first nine months of 2019, a bump of 6.7%

Meanwhile, the wirehouse channel, which has been bleeding advisers to the competition for years, is the worst performing in terms of gaining experienced advisers, posting a net loss of 1,005 advisers for the first three quarters of the year.

Looming over the landscape for advisers jumping to a new firm or considering starting their own at the moment is the massive acquisition by the Charles Schwab Corp. of TD Ameritrade, both of which operate giant custodians that work directly to support the business operations of RIAs. What will that combination eventually look like?

This could have an impact on the so-called hybrid firm, which operates both as an RIA that charges clients fees and as a broker, which charges commissions for transactions, said one recruiter.

"You’re going to continue to see more and more hybrid advisers going from one broker-dealer to another or one custodian to another looking for flexibility on pricing for technology and custody services," said Jeremy Belfiore, CEO of Trusted Visions Placement & Consulting.

"This has been the year of the wirehouse adviser for us, as well as other employee models," said Daniel Schwamb, executive vice president of business development at Kestra Financial. "The pandemic and working from home have opened the eyes of many of those types of advisers to the fact that they don’t need the office and support staff they thought they needed."

"Instead, technology is more important than ever -- having digital signature of documents and the ability to view client accounts on any device has come to the fore," he said. "The question for those advisers is how can they do business without being in front of the client? That means those captive or employee firms will continue to be under pressure."

Working as an independent RIA has upsides and downsides for advisers compared to working at one of the four wirehouses.

RIAs have lower overhead and advisers typically keep a higher share of revenue -- in the range of 60 cents to 70 cents per dollar generated -- than advisers at wirehouses, who are paid typically in the range of 35 cents to 40 cents per dollar of revenue.

Advisers who own their own RIAs also have certain tax advantages as small-business owners, while wirehouse advisers often receive steady referrals of clients because of the national brands of the banks.

Also of note, Fidelity Brokerage Services had a net gain of 191 advisers in the third quarter and 431 over the first nine months of the year, according to InvestmentNews Research.

Fidelity Investments said last month it intends to hire 4,000 people over the next six months as the money manager benefits from this year’s turmoil while some of its rivals struggle.

The company said in October that the additions would be in areas including financial advisers and customer service agents and represent a 15% increase in associates who focus on clients.

Latest News

Married retirees could be in for an $18,100 Social Security cut by 2032, CRFB says
Married retirees could be in for an $18,100 Social Security cut by 2032, CRFB says

A new analysis finds long-running fiscal woes coupled with impacts from the One Big Beautiful Bill Act stand to erode the major pillar for retirement income planning.

SEC bars New Jersey advisor after $9.9M fraud against Gold Star families
SEC bars New Jersey advisor after $9.9M fraud against Gold Star families

Caz Craffy, whom the Department of Justice hit with a 12-year prison term last year for defrauding grieving military families, has been officially exiled from the securities agency.

Navigating the great wealth transfer: Are advisors ready for both waves?
Navigating the great wealth transfer: Are advisors ready for both waves?

After years or decades spent building deep relationships with clients, experienced advisors' attention and intention must turn toward their spouses, children, and future generations.

UBS Financial loses another investor lawsuit involving Tesla stock
UBS Financial loses another investor lawsuit involving Tesla stock

The customer’s UBS financial advisor allegedly mishandled an options strategy called a collar, according to the client’s attorney.

Trump's one big beautiful bill reshapes charitable giving for donors and advisors
Trump's one big beautiful bill reshapes charitable giving for donors and advisors

An expansion to a 2017 TCJA provision, a permanent increase to the standard deduction, and additional incentives for non-itemizers add new twists to the donate-or-wait decision.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.