BDs Taking a Hit as More Advisors Choose Independence: Cerulli

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A new report from Cerulli Associates indicates that many broker-dealers are finding it difficult to generate net growth in advisor affiliations as alternative affiliations become more popular among financial advisors.

Wirehouses appear to be especially at risk of losing advisors, the report said, as their advisors often say they are undecided whether to remain affiliated with their firm over the next 12 months.

These advisors identified several challenges of operating at wirehouse firms, including insufficient staffing support, changes to compensation and imposed minimum for new clients.

“These frustrations all relate to the extent to which an advisor is able to control how they operate their practice and are common motivating factors for breaking away,” Michael Rose, associate director of wealth management at Cerulli, said in a statement.

Cerulli’s research found that 71% of all advisors, on average, would prefer independent affiliation — including independent broker-dealer, hybrid RIA and independent RIA affiliation — if they were to change firms, compared with only 44% of advisors who are currently independently affiliated.

“This suggests that there is still an excess demand for independent affiliation among advisors, which will likely drive the growth of the independent channels over the foreseeable future,” Rose said.

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