Switching firms can cost advisers 19% of assets: Cerulli
Those making a move risk losing clients and accounts; they also face operational challenges.
Approximately one-fifth (19%) of client assets are lost when advisers change firm affiliations, in addition to clients the advisers had planned on leaving behind, research by Cerulli Associates has found.
Advisers identify the ability to build financial value (74%) and a desire for greater independence (67%) as the top reasons for changing firms, but they shouldn’t ignore the risks involved in such a move, Cerulli said in a release.
“Unplanned client attrition is a significant concern among advisers, particularly those who consider breaking away to an independent channel,” according to Cerulli’s Michael Rose. “It is critical that advisers perform an honest self-assessment of the strength of their client relationships, and the share of their client base that could be at risk as a result of breaking away.”
In addition to client attrition, advisers switching firms identify operational matters (77%), learning new technology systems (75%), and revenue lost during the transition period (71%) as the top challenges they experienced.
The high ranking that advisers gave to operational challenges, such as opening new accounts and dealing with account transfers, means firms that investing in technology and operational personnel should have an advantage when it comes to recruiting and retaining advisers, Cerulli said.
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