It’s a lot to unpack. The latest research from global analytics firm Cerulli Associates finds that advisors are more likely to join an existing registered investment advisor (RIA) firm, rather than start their own independent firm.
“Many advisors are daunted by the task of forging their own path and the accompanying headaches,” states Bing Waldert, director at Cerulli. “Advisors considering the RIA channel are increasingly looking to join existing firms that can provide them with not only the necessary operational infrastructure, but also a sense of community.”
The Boston-based firm also notes that recruitment has been a hot button in the industry for some time. But even those who remain with their firms demand more support and a culture that values advisors and their clients. Advisors are attracted to firms that offer a high level of service and flexibility in terms of how the advisor chooses to conduct business. Those who moved within the past three years cite the desire for greater independence as the most important factor influencing their decision to switch firms.
Cerulli adds that by emphasizing the various options available to advisors, headhunters at broker/dealers and custodians can foster trust and help steer advisors to the right affiliation model. Firms that want to succeed at onboarding and retaining advisors need the infrastructure, technology, and service delivery that enable their advisors to segment their service model.
The firm also notes the emergence of what it calls ‘sub-aggregators’ like Dynasty and Hightower. These firms support multiple advisory practices, with advisors operating autonomously, often across multiple geographies. They have professional leadership in place. Perhaps most importantly, the advisor’s primary relationship is with the sub-aggregator rather than the B/D, custodian, or platform.
The rise of these types of firms creates a complex network of decision-makers if asset managers wish to receive flows from independent advisors.
Broker/dealers and custodians must be able to offer superb technological and operations support if they wish to work with sub-aggregators. However, striking the right relationships means the ability to create recruiting scale.
For asset managers, sub-aggregators create multiple influence points. Success with these firms may require coordination of institutional sales, portfolio management, and multiple field-level wholesalers.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
