New Survey Gauges Breakaway Broker Sentiment,
Identifies Top Catalysts for Making a Move
Nearly a decade since the financial crisis, the breakaway broker
movement remains alive and well, as the brokerage environment
continues to drive registered representatives to consider moves to
independence, a new TD Ameritrade Institutional1 survey finds.
More than half of breakaway brokers -- that is, those who are
considering making a move from full-service broker-dealers to
become independent registered investment advisors (“RIAs”) -- are
dissatisfied with their employers on multiple levels, including
corporate culture, leadership, career opportunities and
compensation, according to TD Ameritrade Institutional’s 2017 Break
Away to Independence Survey.
Indeed, just 12 percent of breakaways say they are satisfied
with their current employer overall.
The survey connected with 134 brokers who said they intend to go
independent within the next three years. On average, these survey
participants oversaw $274 million in client assets, have been with
their current firm for 12 years and in the industry for 18
years.
Nearly half of breakaways surveyed expect the brokerage industry
to deteriorate significantly in 2018. These brokers say that the
regulatory environment is the industry's biggest hurdle, followed
by changing compensation structures and reputational issues.
"There is an undercurrent of discontent as disenchanted brokers
navigate the second half of their careers," said Scott Collins,
Director of Brokerage Independence, TD Ameritrade Institutional.
"Midcareer breakaways have enough tenure to realize that they have
options, and that the independent RIA path can offer a better way
to serve clients and advance their careers."
The Lure of Independence
Starting their own RIA firm or merging their business into
existing firms are the preferred exit strategies for breakaways.
The survey found that greater independence and flexibility in
serving clients is what breakaways want most in making a move. The
opportunity to earn more money ranked second, followed by wanting
control over day-to-day operations.
Breakaways are confident in their ability to succeed as
independent financial advisors, whether on their own or as part of
a team.
Confidence to Make a Move
The survey also found that going independent does not have to
mean going it alone.
Fifty-eight percent of breakaways expect to move as a team.
Meanwhile, 87 percent have confidence that, when they decide to go,
their team will leave along with them, and 71 percent are certain
that their clients will follow them.
Nearly 80 percent say they will be able to get the support and
guidance they need to succeed once independent. The support will
come largely from friends and former colleagues who are already
independent, and also from their RIA custodian.
Concerns About Independence
To be sure, the survey found that the career-changing move to
independence is not one that brokers consider lightly. More than a
third of breakaways say they have considered doing so before but
have stopped short of following through.
So what holds some brokers back? Half of breakaways say concerns
over legal and compliance management give them pause, and a quarter
says that the act of transitioning seems like it could be
difficult.
Breakaways reported that the DOL's Fiduciary Rule is a factor in
determining the timing of when they will go independent. Though 55
percent are waiting to see how the rule will impact them before
moving, 26 percent they may move sooner because of it.
Independent RIAs Offer Encouragement
For a reality check on what it is really like to be an
independent RIA, 55 percent of breakaways have reached out to
friends and colleagues who have already transitioned. Most came
away from these conversations even more motivated to move, hearing
comments such as, "good idea," "better compensation" and "more
control".
"Becoming an independent RIA can be transformational for
financial advisors who want to break out of employee-employer mold
and gain control of how they serve clients," said Collins. "They
need to do their research and understand all their options, but
independence may be the right choice for them and for their
clients."
About the Survey
The TD Ameritrade Institutional 2017 Breakaway to Independence
Survey was developed to understand what motivates seasoned
financial professionals at full-service broker-dealers to consider
a move to the independent RIA channel. In September 2017, 134
participants who indicated they planned to go independent within
two to three years completed an online survey by Market Strategies
on behalf of TD Ameritrade Institutional. Survey respondents were,
on average, 46 years old and indicated they were handling $273.8
million in client assets. Respondents also indicated they had
worked as financial advisors for an average of 18 years, and were
with their current employer for 12 years on average. The margin of
error for this survey is +/- 5.8%.
TD Ameritrade Institutional and Market Strategies International
are separate and unaffiliated and not responsible for each other’s
services and policies.
About TD Ameritrade Institutional
TD Ameritrade Institutional is a leading provider of
comprehensive brokerage and custody services to more than 6,000
fee-based, independent RIAs and their clients. Our advanced
technology platform, coupled with personal support from our
dedicated service teams, allows investment advisors to run their
practices more efficiently and effectively while optimizing time
with clients. TD Ameritrade Institutional is a division of TD
Ameritrade, Inc., a brokerage subsidiary of TD Ameritrade Holding
Corporation.
About TD Ameritrade Holding Corporation
Millions of investors and independent registered investment
advisors turn to TD Ameritrade’s (NASDAQ: AMTD) technology, people
and education resources to help make investing and trading easier.
Online or over the phone. In a branch or with an independent RIA.
First-timer or sophisticated trader. Our clients want to take
control, and we help them decide how - bringing Wall Street to Main
Street for more than 40 years. TD Ameritrade has time and again
been recognized as a leader in investment services. Visit our
newsroom or amtd.com for more information.
Brokerage services provided by TD Ameritrade, Inc., member FINRA
/ SIPC
1 TD Ameritrade Institutional is a division of TD Ameritrade,
Inc., a brokerage subsidiary of TD Ameritrade Holding
Corporation
Source: TD Ameritrade Holding Corporation
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version on businesswire.com: http://www.businesswire.com/news/home/20171218005191/en/
TD Ameritrade InstitutionalJoseph Giannone,
201-369-8705Communications + Public
Affairsjoseph.giannone@tdameritrade.com
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