Tech could push more advisers to break away: Fidelity

A majority of advisers surveyed say firms that have been digitally innovative during the pandemic are more attractive destinations

The pandemic has encouraged more advisers to consider switching firms, but technology may prove to be the catalyst in advisers’ decision to break away, according to the 2020 Advisor Movement Study that Fidelity Institutional released Tuesday.

About half of the advisers surveyed noted that working remotely because of the pandemic has made going independent seem more feasible, according to the study. Coupled with the fact that the majority of advisers (65%) said firms that have been digitally innovative during the pandemic are more attractive destinations, technology could be the factor that pushes an adviser to make the switch.

Still, some advisers expressed concerns that would be key to their decision to break away. Four in 10 advisers surveyed agreed that industry-wide digital enhancements resulting from the pandemic have made it easier to move firms, but more than half cite concerns about the possible difficulties in transferring accounts in a virtual environment. Fidelity, for one, has transitioned more than 140 firms since March.

Moreover, two-thirds of advisers think that virtual meetings with firms would be less effective than in-person visits; more than half of advisers considering a move to a new firm still rely on visits as their top resource for gathering information about their potential new firm.

In addition, advisers say that they would need increased compensation to switch firms, according to the study.

While some advisers are considering a move within the next 12 months, about eight in 10 noted that they would need greater financial incentives to switch firms given the uncertainty caused by the pandemic; nearly one-third of advisers said that higher compensation could convince them to switch firms.

Fidelity surveyed 540 advisers in February and March, then did another round of surveys in September of 388 advisers, 90% of whom had participated in the first round, to get a sense of the effect the pandemic was having on adviser moves.

“The pandemic may prove to be a catalyst for advisers considering a move as the remote environment has — for many advisers — emphasized the benefits of greater flexibility,” said Charlie Phelan, vice president of practice management and consulting for Fidelity Institutional. “Firms will need to remain competitive on compensation, but this study shows that there’s opportunity for firms to sharpen their adviser technology story and continue to invest in new digital tools.”

The technology with the most notable adoption among advisers who switch is eSignature, which experienced a 190% rise in enrollment and a fourfold increase in transactions from March to October, according to Fidelity data.

Employee onboarding can be the next daunting task for an adviser who changes firms, according to Fidelity. In that light, the firm is testing out technology that can substitute for in-person networking for new employees. In September, Fidelity said it was piloting a virtual reality experience for its remote onboarding program that would allow new employees to interact and engage with each other in a creative way despite barriers like physical location.

The pilot program run by the Fidelity Center for Applied Technology provided virtual reality headsets — devices widely used for video game simulations — for more than 140 employees as part of their remote onboarding to replace Fidelity’s traditional in-person training program in May.

“Pre-pandemic, firm culture influenced many advisers’ decision to move, and though our research found that it’s decreased in importance over the past six months, firms still need to consider the culture factor as they reimagine how they engage with advisers through the recruiting and onboarding process,” said Phelan.