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Fidelity Profiles Independence-Minded Advisors

May 9, 2013

As advisors continue to make the transition to independent practice, Fidelity Investments has developed a profile of who is making the move and how they have fared.

According to the custody provider's newly released "Insights on Independence" study, advisors who made any sort of move saw the highest increase in compensation in the last five years, up 22% since 2008 (compared with a 17% increase for those who didn’t), and those who moved to independent models fared best, with compensation increasing 36% on average.

The study of 783 advisors was conducted late last year, in collaboration with Bellomy Research. Advisors who took part had assets under management of more than $10 million each and, in the last five years, had either voluntarily moved firms, considered a move but stayed put or never considered a move.

The average advisor who had made a move since 2008, the study found, was 46 with 18 years of tenure, had $149 million under management, made $310,000 a year and chose to move for job-satisfaction reasons even more than for money. Those who made a first-time switch to an independent model were on average 44, had $128 million under management, had fee-based businesses and brought home average compensation of $219,000.

RIAs and independent broker-dealers saw the most growth from advisors who moved firms, jumping 17 points since 2008 to account for 40% of the total.

Fence-sitters and those who moved reflect the “future face of advice,” says Fidelity. They were more fee-based and more likely to team up than go solo, compared with those who were entrenched. Risk aversion was the biggest factor holding back fence-sitters, the study found, with Gen X and Gen Y advisors and women in particular citing such concerns.

By Elizabeth Jensen
  • To read the Fidelity Investments article cited in this story, click here.