Study Examines What Firms Can Learn From Advisors Who Move and How
That May Influence Recruiting and Retention Strategies
BOSTON–(BUSINESS WIRE)–Fidelity Clearing & Custody Solutions, the division of Fidelity
Investments that provides clearing and custody to registered investment
advisors (RIAs), retirement recordkeepers, broker-dealer firms, banks
and insurance companies, today released the results of its 3rd
bi-annual study on advisor movement. The study explored the motivations
and experiences of advisors who switched channels, which Fidelity terms
Nearly 34,000 financial advisors switched firms in 2014.1 And
Fidelity’s research reveals that, compared to its previous study in
2013, those who are Movers today are more likely to be female (14
percent vs. 8 percent), have clients with higher assets ($829,000 vs.
$673,000), and tend to be younger (22 percent are Gen Y vs. 14 percent
in 2013). In fact, almost one-third of Movers made their first moves
within the first four years of their careers. Fidelity research found
that there are more Gen Y advisors among the highest-producing Movers
(43 percent of advisors with $250M+ AUM versus only 14 percent in 2013),
meaning more business is at risk with these young and early movers.2
“Clearly, advisors are on the move; and, if they’re not moving, they’re
thinking about it,” said Bob Oros, executive vice president and head of
the RIA segment at Fidelity Clearing & Custody Solutions. “We’ve been
telling firm leaders that they need to go beyond viewing this trend as a
threat. Instead, let’s try to understand the motivations of these
advisors, particularly the younger ones, so that this becomes an
opportunity for firms to gain insights into how to attract new talent
and retain their existing workforce.”
Lessons from Movers
Moving to independent channels continued
to be the largest trend (50 percent of Movers chose an RIA or IBD), and
Movers who chose an RIA or IBD cited several reasons for their decision,
including having more control over daily operations, the ability to
focus on clients and more independence in developing and executing
investing strategies. Based on comparisons to previous studies,
financial motivations – while still one of the top reasons to move – may
be less important now than they were in the past: Movers more frequently
cited having more control over their practice (15 percent vs. 8 percent
in 2013) and having a better work/life balance (30 percent vs. 21
percent) as among the top reasons for leaving their previous firms.
The research also shows that most Movers are seeing benefits from their
decisions: 92 percent of Movers said they are happy with their decision
to move; 80 percent of Movers are in a better financial position after
the move; and Movers reported a big jump in satisfaction (only 8 percent
were satisfied before the move vs. 67 percent after the move). From a
financial standpoint, Movers who have been with their firms for three to
five years saw, on average, a 59 percent increase in their assets under
management (pre-move the average AUM was $105M and post-move the average
AUM was $167M).3
Movers experienced some challenges they wish they had known about prior
to their moves, though these challenges are less of an issue now than
they were in the past: the amount of paperwork involved (25 percent vs.
39 percent in 2013), the length of the transition (24 percent vs. 29
percent), technology issues (20 percent vs. 28 percent) and the
difficulty in transferring investments (16 percent vs. 21 percent). This
may be due to the fact that advisor movement has become more common in
the industry, and for more Movers, former colleagues who had already
moved were involved in their decision (40 percent vs. 29 percent in
2013), possibly helping to set more realistic expectations.
Key Considerations for Firm Leaders
By understanding what
drives the advisors who are Movers, firm leaders can develop targeted
retention strategies to take advantage of talent opportunities. Findings
from this study, as well as research from Fidelity’s Future Leaders
Study, reveal that firms are more successful when they formalize a
support structure to develop and retain top talent. Some considerations
for firm leaders include:
Providing greater autonomy around and improving investment
capabilities: Movers are looking for the freedom to choose
investing strategies that are most appropriate for their clients and
they want access to research and analysis on investments. Consider how
to improve existing systems and potentially implement new ones.
Providing more explicit information on compensation: For
younger advisors, consider providing training and communication on how
compensation works at the firm, initially and throughout their
careers. Also, create a clear career path with transparent guidelines
on the results needed to transition from one role to another. And for
more experienced advisors who are critical to the firm, consider
offering equity and ownership opportunities.
Promoting job satisfaction, particularly for top performers:
Movers are looking for more support from their firms. Consider
offering them access to client referral programs and provide firm
marketing and business development support to help them build their
books of business and differentiate themselves in the marketplace.
To learn more about how to retain and develop advisors and to access the
findings from Fidelity’s Future Leaders Study, visit: go.fidelity.com/futureleaders.
To access additional insights on recruiting young advisors, check out
About Fidelity Investments
goal is to make financial expertise broadly accessible and effective in
helping people live the lives they want. With assets under
administration of $5.2 trillion, including managed assets of $2.0
trillion as of March 31, 2016, we focus on meeting the unique needs of a
diverse set of customers: helping more than 25 million people invest
their own life savings, nearly 20,000 businesses manage employee benefit
programs, as well as providing nearly 10,000 advisory firms with
investment and technology solutions to invest their own clients’ money.
Privately held for nearly 70 years, Fidelity employs 45,000 associates
who are focused on the long-term success of our customers. For more
information about Fidelity Investments, visit https://www.fidelity.com/about.
The content provided herein is general in nature and is for
informational purposes only. This information is not individualized and
is not intended to serve as the primary or sole basis for your decisions
as there may be other factors you should consider. Fidelity does not
provide advice of any kind.
Fidelity Clearing and Custody Solutions provides clearing, custody, or
other brokerage services through National Financial Services LLC or
Fidelity Brokerage Services LLC, Members NYSE, SIPC. 200 Seaport
Boulevard Boston, MA 02210.
Fidelity Investments Institutional Services Company, Inc., 500 Salem
Street, Smithfield, RI 02917
© 2016 FMR LLC. All rights reserved.
1 Source: Discovery Database, Fidelity Institutional Analysis.
2 Methodology info: The 2015 Fidelity Insights on
Independence Study was conducted in collaboration with Bellomy Research
from July 16 to August 9 2015, among 692 financial advisors, of which
about one-third are high producing (AUM of $250 million or more).
Advisors were screened based on having assets under management of at
least $10 million, and included advisors who a) had switched firms
(Movers), b) had considered a switch, or c) had not considered a
move/moved in the last five years. Bellomy Research is an independent
third-party research firm and is not affiliated with Fidelity
Investments. The study did not identify Fidelity as the sponsor.
3 “Movers” were defined as having switched firms in the past
5 years. “Pre-move” assets were based on responses to the question What
amount of assets did you/your team initially bring over to your new firm
when you moved?. “Post-move” assets were based on responses to the
question What is the total value of assets that you currently manage
independently/as part of a team? Calculations for increase in % of
AUM pre and post-move were based on responses of advisors that moved 3
to 5 years ago