Nearly half of future breakaway brokers expect the brokerage channel to deteriorate significantly next year, according to a new survey by TD Ameritrade Institutional and Market Strategies International. Forty-one percent expect the state of the brokerage industry to remain the same.
TD Ameritrade Institutional and MSI produced the 2017 Break Away to Independence Survey that polled 134 brokers at wirehouses, independent broker/dealers and bank-based brokerages.
Brokers polled said they planned to leave their firm for the independent channel within two to three years and had an average tenure of 12 years at their current company and 18 total years as a financial advisor. They also each managed an average of $273.8 million in assets and were on average 46 years old.
To be sure, the respondents represent a small number of the thousands of brokers in the U.S., but the findings are nonetheless grim. Those surveyed are not only unhappy in their channel of the advice business, they’re also bearish on its future.
Eighty five percent of breakaways-to-be said the regulatory environment was the top challenge for brokerages, followed by changing compensation structure (54 percent) and public trust and reputation (46 percent).
They also cited greater independence and control over their business as the top reason they planned to leave. Just 12 percent of the brokers were satisfied with their current employers, according to the study. More than half of all respondents also said they dislike their employer’s culture, leadership and career opportunities.
Most of those planning to leave (64 percent) said they will either start their own firm or merge with another business. Seven in 10 were “extremely confident” their clients would follow them.
Nearly six in 10 plan to move with a team of colleagues, and 70 percent expect to consult colleagues who have already gone independent. Forty-three percent will seek guidance from RIA custodians.