James Gorman and Sallie Krawcheck said it would be so. With markets stabilizing and bank-brokerage merger integrations progressing, fewer brokers are fleeing the big Wall Street wirehouse firms for the RIAs and independent b/ds in 2010. But those who are leaving tend to have more assets to drag with them.
Fidelity Investments said nearly 120 brokers and teams with more than $8 billion in assets have moved to its RIA and independent broker/dealer platforms in the first three quarters of this year. That’s down from 155 brokers and teams representing $8.5 billion in AUM for the comparable period a year earlier, although average assets per team are up 26 percent, from $54 million to $69 million. Meanwhile, Pershing reports that the number of breakaway brokers dropped from 111 in 2009 to just 30 in the first half of this year. This year’s breakaways include 13 that joined Pershing’s RIA platform; their assets averaged $250 million, or twice the AUM that RIAs who joined the company last year held, says Chief Executive Mark Tibergien at Pershing Advisor Solutions.
Tibergien says there’s less pressure on advisors to jump ship now if they signed retention deals at the start of the year. “They don’t feel the urgency. They have the money, they have the agreement,” he says. It frees them to become “much more deliberate” about their next move, Tibergien adds; he says Pershing is negotiating with 60 to 80 wirehouse teams now and he expects to have 20 to 25 RIAs on board in total by the end of this year. Another factor that makes breaking away easier: Advisors who leave wirehouses tend to bring most of their clients along with them, according to an Aite Group survey released last summer.
Fidelity spokesman Stephen Austin said larger numbers of brokers left the wirehouses last year because of the damage done to their employers’ brands from the financial crash, which drove discontent among many clients. Other some brokers left after being shown the door by their wirehouse employers over production issues. “Now what we’re seeing is a more thoughtful approach, and large teams with more assets breaking away,” he says.
Nearly 45 percent of the teams that affiliated with Fidelity started their own RIAs with the firm’s Institutional Wealth Services. The rest either joined a broker/dealer client of the firm’s National Financial business, or they signed up with an existing RIA on Fidelity’s platform. Five of the breakaways that joined Fidelity had assets of more than $500 million, the firm says.
The move to break away isn’t always tied to the desire for independence. Tom Nally, managing director of institutional sales at TD Ameritrade, says 42 percent of the advisors they enlisted this year have joined an existing firm, up from 34 percent last year. Some prefer not to have to start and operate their own businesses from scratch, he says. Nally says 212 brokers have enlisted with the company so far this year, up 44 percent. Average asset figures were unavailable.
Schwab Advisor Services, the RIA platform of Charles Schwab Corp., is seeing roughly the same numbers of teams going independent this year as in 2009, Schwab spokeswoman Lindsay Tiles say. With more than 6,000 RIAs at the end of 2009, Schwab continues to be the biggest custodian in the channel. No new broker numbers were available for 2010; in 2009, Schwab added 172 RIAs to its platform and reported assets in custody for the year of $590 billion.
