Although retention bonuses and deferred-payment recruiting packages have locked many top-producing brokers in place at wirehouses, a substantial number are still looking to break free.
According to a survey conducted by Aite Group LLC, almost four in five locked-in brokers are considering leaving their employer in the next 18 to 24 months — and 10% said a departure is more likely than not.
In fact, as many as 11,000, or 20% of the entire wirehouse brokerage force — including both high and low producers — may be looking for a new home in the next two years, according to the survey.
“Clearly, while wirehouses were able to reduce the desire to break away through targeted retention payments, the breakaway-broker topic has certainly not been eradicated with it,” Aite analyst Alois Pirker wrote in a report. “It appears that the retention packages have bought wirehouse firms time, but not the undivided loyalty of their most valued brokers.”
To many brokers, being paid well has made at least some difference in job satisfaction, however. Locked-in brokers reported that they are more satisfied with their current situation than are their lower-producing colleagues. Close to half (48%) of locked-in brokers said that they are “satisfied” with the current broker-dealer firm, the Aite survey showed, compared with just 29% of lower-producing brokers who are not locked-in.
“That these financial advisers were not deemed worthy of a redemption package must be responsible for some of the dissatisfaction they report,” Mr. Pirker noted.
Asked where they would prefer to go if they left their current firm, one-third of all wirehouse broker respondents (both locked in and not) said they would likely join another wirehouse. About one in four indicated that they would prefer an independent channel, while a similar percentage said that they would choose a non-wirehouse broker-dealer.
More wirehouse brokers than non-wirehouse ones said they would probably set up their own registered investment adviser firm, Aite reported.
The report is based on a survey Aite did with 159 financial advisers at wirehouse firms and other captive brokerage firms, including
Bank of America Merrill Lynch, Morgan Stanley Smith Barney LLC,
Wells Fargo Advisors LLC and
UBS, as well as brokers at other self-clearing firms, such as RBC Wealth Management, and fully disclosed broker-dealer firms. The survey was conducted online in the fourth quarter last year.
Jed Horowitz contributed to this story.
