Independence still popular as recruiting recovers
Recruiting made a partial recovery last year from its pandemic-induced plunge in 2020, and data show advisers are continuing to embrace independence, with 65% of those who changed firms last year also changing channels.
Stephen Lamb [00:00:00] Hello and welcome to By The Numbers, I’m your host, Steve Lamb. On today’s episode, we’re recapping the last year, an adviser recruiting the number of advisors on the move has seesawed over the past two years as the normal rhythms of recruiting were disrupted by remote working and travel restrictions due to COVID 19.
Devin McGinley [00:00:21] That’s right, from 2019 to 2020, the total number of advisers switching firms fell more than 15 percent. Recruiting activity had been robust for the first few months of 2020 before falling off a cliff. So office closures and the end of in-person networking were the clear culprits. But as things returned to a semblance of normal last year, total recruiting activity partly rebounded, rising about four percent over 2020.
Stephen Lamb [00:00:47] As recruiting ramped back up, some familiar names topped the industry’s recruiting ranks. LPL Financial was the leader, bringing on 1004 advisors on net. Rounding out the top five in recruiting were Fidelity Brokerage Services, Ameriprise Financial Services and Raymond James, both its independent and employee channels.
Devin McGinley [00:01:08] On the other side of the coin, Merrill Lynch lost the most advisers with one thousand seventy closely followed by Wells Fargo clearing services at 999. Edward Jones, Equitable Advisers and TD Ameritrade Institutional rounded out the bottom five in net recruiting. Those rankings, for the most part, tell the ongoing story of advisors beginning their careers at banks and wire houses and moving to independent channels as they grow. On net, more than 2000 advisers left wirehouses last year, while about 1500 moved to Aria’s and another 1200 to independent broker dealers.
Stephen Lamb [00:01:43] And what made 2021 a unique year for recruiting is that the trend towards independence reached new peaks. While overall recruiting was still 12 percent lower than before, the pandemic, moves to independent channels were up nearly three percent over 2019. Those moves to independence represented about a quarter of total advisor movement and the percentage of advisors switching channels faster even than my daughter changing shows on Netflix was at its highest since at least 2009, at 65 percent.
Devin McGinley [00:02:14] While the throes of a global pandemic may not seem the most obvious time to make a major move, remote work away from the amenities and resources of the office apparently convinced a lot of advisors that they could take a step toward greater independence. Another case in point is the recent IPO filing by Dynasty Financial Partners, one of the many service providers that helps advisors break away and make the jump to independence, according to documents the company filed with the SEC asset base revenue from its network shot up 47 percent over the first nine months of 2021.
Stephen Lamb [00:02:47] And that coming IPO itself represents a bet that advisors will continue to break away or otherwise seek greater degrees of independence in their practice. If the last year is any indication, it’s not a bad bet. Tune in next month for another round of By The Numbers. Thanks for watching.
