Forty-four Percent of Potential Breakaways Say
They Will Go Independent in the Next Year
The independent registered investment advisor (RIA) channel is
as attractive as ever to brokers seeking greater control over their
careers and their ability to serve their clients, not to mention a
higher standard of living for themselves, according to a recent
survey conducted for TD Ameritrade Institutional1.
According to the 2019 Breakaway to Independence survey, 44
percent of potential breakaway brokers – those at national and
regional firms or independent broker-dealers who are considering a
move to independence within three years -- say will make their move
within the next year. And 46 percent of potential breakaways feel
even more strongly about switching to independence than they did at
the end of 2018.
According to Discovery Data2, the independent RIA continues to
attract more breakaways than any other in 2018, with a net gain of
3,184 advisors, compared to wirehouses, which had a net loss of
1,247 representatives.
The primary drivers to independence – more control, more
independence, and the opportunity to build equity in a sustainable
business -- are consistent with previously reported TD Ameritrade
Institutional findings3. Potential breakaways also reiterated in
this year’s survey that their biggest sources of dissatisfaction
with their current firms are the corporate culture, strategic
direction and their firms’ compensation plans.
“The independent path remains top of mind for brokers,” said
Scott Collins, managing director of institutional consulting for TD
Ameritrade Institutional, where he oversees recruiting of breakaway
brokers as new RIA clients. “It’s not hard to see why: independent
RIAs can provide comprehensive, professional advice and they have
an alignment of values and interests with their clients.”
Other motivations to move also remain: potential breakaways say
that their current firms are more constrained by the regulatory
environment and pricing pressures, which impacts the ability of
brokers to attract new clients and increase revenue.
But deciding on the right time to transition can be challenging,
regardless of sentiment. Brokers surveyed reported holding off on
going independent amid heightened market volatility so they can
spend more time with clients and on managing their practice.
Breakaways Want More: Control, Compensation and
Camaraderie
Ninety-three percent of breakaway brokers believe that the
independent channel offers them at least as much income as, if not
more than, their current firms. In fact, 36 percent of these
brokers say they would move immediately if they knew their income
would be slightly higher – that is, between 5 to 20 percent more
than what they make today. That crowd would swell to 87 percent if
their compensation was more than 20 percent higher in their first
year in the independent channel.
The ability to have more control, together with the potential
for higher income, are the top reasons brokers want to go
independent, but the majority do not want to go it alone.
Thirty-six percent of potential breakaways envision themselves
acquiring or merging with another business on the road to becoming
an independent RIA. And nearly a third (33 percent) want to join an
existing firm.
Fear of the Unknown Remains a Hurdle
On the surface, many of today’s potential breakaways seem to be
ready to make a move: 99 percent say their clients choose to work
with them individually because of a personal, trusted relationship,
and three out of four say they do not need a big national brand
behind them to grow their business.
But for more than half of the brokers surveyed, the unknowns
hold them back from switching to the independent RIA channel.
Yet, according to those who have already become independent
RIAs, these fears are largely unfounded. Eighty percent of those
surveyed say the transition to the RIA model was easier than they
imagined, 72 percent transitioned all the clients they wanted to
keep, and 64 percent found that running their own business was
easier than they had expected.
Further, 69 percent of RIAs agreed that breaking free of a
national brand was better for their bottom lines, and a similar
amount said that technology was even better than they had expected.
Indeed, 83 percent of advisors in the survey said their quality of
life had improved once they became an independent RIA.
“Those who choose the independent RIA route and enjoy its
flexibility and leading-edge technology tell us they should have
done it sooner -- or that the reward has far outweighed any risk,”
said Collins. “Advisors say they can’t imagine not being an
independent RIA. They relish having full responsibility and
authority for their success and being able to run their firms and
manage their clients in the way they think is best.”
About the Survey
The TD Ameritrade Institutional 2019 Breakaway to Independence
survey was developed to understand what motivates seasoned
financial professionals at full-service broker-dealers and
independent broker dealers across the country to consider a move to
the independent RIA channel. From April to May 2019, 118 brokers
who indicated they planned to go independent within two to three
years, along with 337 advisors who were already at an independent
RIA (“breakaways”), completed an online survey by Escalent on
behalf of TD Ameritrade Institutional. Broker respondents were, on
average, 50 years old and indicated they were handling close to $95
million in client assets. These respondents indicated they had an
average of 18 years’ experience, and were with their current
employer for 10 years on average. “Breakaway” respondents were, on
average, 50 years old and stated their firms handled an average of
$213.5 million in client assets. These respondents indicated they
had worked as financial advisors for an average of 15 years and
were with their current firm for 12 years, on average. The margin
of error for this survey is +/- 5.8%.
TD Ameritrade Institutional and Escalent are separate and
unaffiliated and not responsible for each other’s services and
policies.
About TD Ameritrade Institutional
TD Ameritrade Institutional empowers more than 7,000 independent
registered investment advisors to transform the lives of their
clients. It provides powerful technology and resources that help
simplify running a business and let advisors spend more time doing
what matters most — serving their clients. Through meaningful
innovation, steadfast advocacy and unwavering service, TD
Ameritrade Institutional supports RIAs as they build businesses
that positively impact their clients and communities. TD Ameritrade
Institutional is a division of TD Ameritrade, Inc., member
FINRA/SIPC, a brokerage subsidiary of TD Ameritrade Holding
Corp.
About TD Ameritrade Holding Corporation
TD Ameritrade provides investing services and education to more
than 11 million client accounts totaling approximately $1.3
trillion in assets, and custodial services to more than 7,000
registered investment advisors. We are a leader in U.S. retail
trading, executing an average of approximately 850,000 trades per
day for our clients, more than a quarter of which come from mobile
devices. We have a proud history of innovation, dating back to our
start in 1975, and today our team of 10,000-strong is committed to
carrying it forward. Together, we are leveraging the latest in
cutting edge technologies and one-on-one client care to transform
lives, and investing, for the better. Learn more by visiting TD
Ameritrade’s newsroom at www.amtd.com, or read our stories at Fresh
Accounts.
Brokerage services provided by TD Ameritrade, Inc., member FINRA
(www.FINRA.org) / SIPC (www.SIPC.org).
1 TD Ameritrade Institutional is a division of TD Ameritrade,
Inc., a brokerage subsidiary of TD Ameritrade Holding Corporation 2
Discovery Data, Rep Movement 2018 3 2017 Breakaway to Independence
Survey, TD Ameritrade Institutional, December 2017
Source: TD Ameritrade Holding Corporation
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version on businesswire.com: https://www.businesswire.com/news/home/20190702005107/en/
Joseph A. Giannone Communications + Public Affairs T:
201-369-8705 joseph.giannone@tdameritrade.com
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