Financial advisors are starting to turn their backs on the idea
of going independent and are instead favoring the benefits of
working at wirehouses, according to a survey conducted by the
Boston-based consultancy Aite Group.
The survey aimed to shed light on the movement of brokers across
the wealth management industry by measuring brokers' desire to
leave their employers, as well as their "motivations, envisioned
timeframe for breaking away, desired destination, and expected
As it stands, about one-third of financial advisors who plan on
leaving one of the four wirehouses said they would prefer to move
to another wirehouse, said Alois Pirker, brokerage analyst at Aite.
That contrasts with just one-fourth who said they favored
To be sure, the allure of independence is still there for some
in the industry, Pirker says. "While there are severe risks
involved, a lot of brokers wish to go independent because they get
the chance to be an entrepreneur versus being an employee," Pirker
But the four wirehouses-Morgan Stanley Smith Barney, Bank of
America Corp.'s Merrill Lynch [BAC], Wells Fargo Advisors [WFC] and
UBS Wealth Management Americas [UBS]-are starting to sweeten the
pot for FAs to stay. (For more in-depth coverage and analysis of
the independent issue, see the upcoming July cover story of
On Wall Street
Top-producing brokers at Merrill Lynch and Smith Barney were
offered retention perks to stay with their new firm for years.
"MSSB offers mortgages and loans for five to six years," Pirker
says. But if they leave sooner, they're on the hook to pay it back.
"This is a way they stay tied to the company," Pirker says.
Aite estimates that about 7,000 brokers left the wirehouses last
year. However, that number constantly fluctuates because of mergers
and other factors that can affect the industry over time. Pirker
used Merrill Lynch as a prime example where brokers were not
accounted for before the merger with Bank of America. "This number
is to be taken with a grain of salt because more movement can
The biggest reason behind an advisor breakaway is uncertainty
with their employer (33%), followed by a desire for a higher payout
(27%), no retention package (3%) and the company's damaged brand
Retention packages are a good strategy for a firm wanting to
keep advisors satisfied, but it's not a long-term solution, Pirker
says. "The retention packages means a lot to keep advisors, but it
buys the wirehouses time, not loyalty."
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