Schwab study explains forces behind advisor moves to independence

Schwab study explains forces behind advisor moves to independence
98 percent of recently independent advisors said the ability to provide more personalized service was a leading motivator for breaking away.
MAY 30, 2024

Advisors have more options than ever as to how they go independent, according to a new study out from Schwab Advisor Services. Their prime reason for going solo, however, remains the freedom to serve their clients’ best interests.

Schwab Advisor Services released today its Supported Independence Study, which surveyed both advisors considering independence and those who moved to independence within the past four years about their experiences exploring and pursuing the independent model. The study also included individual interviews with advisors in both categories for a deeper perspective on how they see their careers evolving.

According to Schwab’s survey, advisors in both the considering and recently independent groups highly value the ability to "shape their own businesses." Among those who have recently become independent, 98 percent said having the ability to provide more personalized service was a leading motivator for breaking away. Among those still considering independence, 98 percent said they are seeking the ability to align their business to their personal values, the report said.

“Though the path to independence continues to evolve in new and surprising ways, one thing remains the same: Advisors seek independence because it offers them the freedom to build their business, their way. They are motivated to offer more comprehensive and product agnostic services – and all with their clients’ best interests at heart,” said Jon Beatty, chief operating officer at Schwab Advisor Services in a statement.

Charles Failla, founder of Sovreign Financial Group, believes the Schwab results are "100 percent spot on" based on his conversations with fellow advisors.

"Many people still think going RIA is about getting a higher payout," said Failla. "Now, to be sure, most advisors that go RIA do, in fact, enjoy a significant bump up in their take home pay. However, what I’m hearing is that while these advisors certainly enjoy capturing more of their payout, they really, really enjoy the added freedom with regard to: compliance, marketing, branding, products, and, solutions”.

Elsewhere in Schwab’s survey, advisors currently considering independence said they are more likely to join or affiliate with an existing RIA (44 percent) than create their own firm (31 percent). Furthermore, the study showed nearly one quarter (24 percent) are unsure of which path they would take.

On the flip side, the report said recently independent advisors were equally as likely to have formed their own RIA firm (50 percent) as they were to have joined/affiliated with an existing RIA (50 percent).

The study also revealed that 60 percent of advisors considering independence are most likely to look to advisors who previously made the transition for advice, while another 45 percent said they would consult with other advisors considering independence. Meanwhile, forty-seven percent cited advisors who have already gone independent as the most helpful source of information, according to the study.

Recently independent advisors feel similarly, the study showed, with 60 percent saying they turned to those who had already transitioned for advice, and 38 percent indicating that these advisors were their best source of information.

Advisors also believe the move to independence is a net good for their clients, the study said. Nearly three-quarters (74 percent) of recently independent advisors say they can build better, longer-term relationships with their clients, and 49 percent of considering advisors believe they will be able to do the same if they become an RIA.

Finally, the survey showed that clients are on board with their advisor’s vision. A healthy 60 percent of recently independent advisors said their clients were immediately aligned with their plan, while 46 percent of considering advisors expect their clients to feel similarly, the report said.

Gold will continue to shine despite soaring stocks, says First Eagle fund manager

Latest News

Investing for accountability: How to frame a values-driven conversation with clients
Investing for accountability: How to frame a values-driven conversation with clients

By listening for what truly matters and where clients want to make a difference, advisors can avoid politics and help build more personal strategies.

Advisor moves: Raymond James ends week with $1B Commonwealth recruitment streak
Advisor moves: Raymond James ends week with $1B Commonwealth recruitment streak

JPMorgan and RBC have also welcomed ex-UBS advisors in Texas, while Steward Partners and SpirePoint make new additions in the Sun Belt.

Cook Lawyer says fraud claims are Trump’s ‘weapon of choice’
Cook Lawyer says fraud claims are Trump’s ‘weapon of choice’

Counsel representing Lisa Cook argued the president's pattern of publicly blasting the Fed calls the foundation for her firing into question.

SEC orders Vanguard, Empower to pay more than $25M over failures linked to advisor compensation
SEC orders Vanguard, Empower to pay more than $25M over failures linked to advisor compensation

The two firms violated the Advisers Act and Reg BI by making misleading statements and failing to disclose conflicts to retail and retirement plan investors, according to the regulator.

RIA moves: Wells Fargo pair joins &Partners in Virginia
RIA moves: Wells Fargo pair joins &Partners in Virginia

Elsewhere, two breakaway teams from Morgan Stanley and Merrill unite to form a $2 billion RIA, while a Texas-based independent merges with a Bay Area advisory practice.

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.