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Von Aldo

Schwab Survey Says Less than Half of FAs at Major Firms Believe Brand Helps Get, Retain Clients

Obviously, the dramatic upheaval that changed the landscape of Wall Street is having some negative effect on advisors at major firms. A Schwab survey, released this morning, of 200 FAs at 15 "major full-service firms," says that 59 percent of the respondents find "the idea of being an independent investment advisor [appealing]." More than half (56 percent) said they would rather join an existing RIA than start one. Over three quarters (76 percent) have had to explain why their firm is still a good place to invest.

Schwab says 126 teams have moved to an independent model with Schwab, as of the end of September 2009. That's compared to 123 teams for all of 2008. We've written about this trend frequently. Other firms are also doing well. Over at TD Ameritrade, it now has $100bn in RIA money from wirehouse advisors (breakaway brokers)--$27bn in new assets last year. It has roughly $15bn in the pipeline.

Early in the year, most of the wirehouse advisors who have switched firms stayed within the wirehouse channel. But recently, that trend has changed. Recent surveys by Discovery Database, which tracks rep and advisor movement, show that only about a third of wirehouse advisors are moving to another wirehouse. RIAs and IBDs are picking up disgruntled wirehouse FAs and gaining market share. Of course, some of this is the result of wirehouses pushing out smaller producers (say, $300,000 and below). That said, our own surveys of our readers do show a cohort of disgrunted wirehouse advisors. (See last year's Broker Report Card, for example; the new Broker Report Card survey is coming out in December's issue and will be online on 4 December.)

Discovery's raw numbers: In 2009 (Jan. thru Oct.) 4,122 reps left the WH channel to another BD channel. In Jan. 2009 there were 97,000 WH reps, in Oct. 2009 there were 85,000 WH reps. In 2008 (Aug. thru Dec.) 910 reps left the WH channel to another BD channel. In Aug. 2008 there were 100,000 WH reps, in Dec. 2008 there were 97,000 WH reps.

Here are some other juicy highlights from the Schwab survey:

• 60% of the advisors surveyed find idea of joining or starting an RIA appealing, and 49% say they’d consider it.

• Less than half (46%) believe their employer’s brand helps them acquire or retain clients 80% believe that if they left their current employer, their clients would follow them

Exposure to the RIA process and familiarity matter:

• Of the respondents who know someone who’s indy or considered it, 77% find the idea of joining or starting an RIA to be appealing

• 47% know someone who is or has considered becoming indy

• Only 46% are familiar with the process of joining an RIA

o Of that group 69% say they’re considering becoming an RIA

The 200 respondents average 10 years of investment advisory experience and have an average of $84m in AUM.

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