There is no question that the past two years have upended everything we ever thought about the way we work and live. And despite the disruption caused by Covid-19 and a global economic crisis, Advisors are more in demand than ever. Booming financial markets and significant gains in production have led to higher overall satisfaction among advisors in 2021. However, there has never been a better time for advisors to go independent. Read on to learn more about why 2022 will be the year of the independent advisor.
Satisfaction Among Wirehouse Advisors Is Falling
According to J.D. Power’s 2021 U.S. Financial Advisor Satisfaction Study, wirehouse advisors have reported lower levels of satisfaction as the pandemic has changed the way we work and live. According to the study’s findings:
Despite payout rates and branding campaigns that suggest higher levels of support for advisors, wirehouse firms have fallen short of advisor expectations during the pandemic, with 34% of wirehouse advisors reporting reduced levels of support from the home office and 29% citing disruption of business services. In both cases, wirehouse advisors have experienced negative effects from the pandemic at approximately double the rate of non-wirehouse and independent advisors. Wirehouse advisors also cite higher levels of difficulty transitioning to remote work.
Technology has been the biggest point of dissatisfaction cited by wirehouse advisors. Only 12% of advisors surveyed in the study reported that they have had a problem-free experience with their firm over the past year. With technological options that have made it easier than ever for breakaway independent advisors to maintain a robust practice without the support of a big firm.
The Market Continues To Favor RIAs and IBDs
Both wirehouse and independent broker-dealer advisors are attracted to the registered investment advisor space, due to its fiduciary nature and fees tied to assets under management. The ability to easily set rates and avoid hourly fee disputes with clients make this an attractive model for independent advisors and investors alike. The RIA model also reduces the cost of compliance, leaving advisors the freedom to focus on their clients’ needs.
RIA and IBD options like Commonwealth Financial Network and LPL Financial have scored high on satisfaction surveys and have had recent success recruiting wirehouse advisors. Commonwealth has lowered its pricing on separately managed accounts and increased transition bonuses for wirehouse advisors.
According to Charles Schwab’s Independent Advisor Outlook Study 2021, conducted earlier this year, an increasing number of firms believe that the RIA model is not yet fully mature and will continue to grow at a higher rate than the rest of the market.
Among the important factors driving the growth of independent advising models are advisor preference for independence, technological improvements that make independence more possible, and an increase in the number of affluent investors. Younger, more technologically savvy investors whose investing preferences have been shaped by a pandemic market prefer more technologically adept advisors who can understand what they’re seeing and help them learn more about investing.
Remote Work Has Shown Many Advisors That Independence Is Possible
Advisors, like workers in many sectors, have realized throughout the pandemic that they prefer more independence and freedom. Increased flexibility, higher quality of life, and more family time are all factors driving many advisors to consider independent models. Over 50% of advisors surveyed by Charles Schwab reported developing new workflows to meet client needs, and 72% reported becoming more flexible in adapting to changes caused by the pandemic. Firms, similarly, have reported that the increase in remote work occasioned by the pandemic has allowed them to recruit more diverse advisors from a wider geographic area.
Advisors who have spent the better part of the last two years working more independently and developing their own ways of doing business are uniquely prepared to make the leap to independent models in 2022.
Want to Keep the Conversation Going?
All of us at Terrana Group welcome the opportunity to consult with you to determine the right platform for you going forward — one that satisfies your long term objectives and is also best for your clients!
Over the course of nearly 30 years, we have helped facilitate thousands of professional placements for Advisors, with client assets transferring exceeding $67 billion dollars. We have completed placements in most every major city throughout the United States, while building deep relationships with the advisory world’s most sophisticated and notable firms — including Wall Street brokerages as well as most Regionals, Boutiques, Banks, Independent Broker Dealers, and RIAs. We have a broad knowledge of the deals that are currently being offered and will ensure that you are being presented with the offer which will be best for you.
Confidentiality, professionalism, and respect are protocol to our practices and beliefs; we handle each and every step of the placement process with complete communication, keeping you informed while making the process smoother from beginning to end.
We are proud to always be considered as a great asset by our clients because of our proven expertise, many years of knowledge, and acute attention to detail. Financial Advisor Recruiting Services are not all created equal; we guarantee that the TG experience for clients and candidates is always world class.
We are based in Chicago, with a nationwide reach. Let us know you are interested by contacting us today. To get the conversation started, email info@terranagroup.com or give us a call at 312.655.8380 today.
