Fidelity® Finds that Financial Advisors Who Moved to an Independent Model Saw Greatest Increase in Compensation

2nd Annual Insights on Independence Study Explores What is Impacting an Advisor’s Decisionto Stay with a Firm or Move; Families are Highly Influential

BOSTON – Fidelity Investments® today unveiled its 2nd annual Insights on Independence study, which found that the independent channel is seeing the most growth from advisors on the move, as well as yielding the greatest compensation increases. The study explored the motivations and experiences of advisors who moved firms in the last five years (“Movers”), those who considered a move but opted not to make a switch (“Fence Sitters”), and advisors loyal to their firms (“Entrenched”). The findings revealed lessons for firm leaders and recruiters, as well as advisors considering a move:

• Moving firms can pay off – Financial advisors who moved firms saw a 22 percent increase in their compensation over 2008 (vs. 17 percent for advisors who stayed at their firms). Those who moved to an independent business model, such as a registered investment advisor (RIA) or an independent broker-dealer, realized a 36 percent increase since 2008.

• It’s a family affair – When family is involved in the decision-making process, they had a major influence in encouraging Movers to make a switch (40 percent of Movers’ family members encouraged the move compared to only 4 percent who discouraged it); yet, family had the opposite effect for Fence Sitters, more often discouraging the move.

• Movers and Fence Sitters reflect future face of advice – Movers and Fence Sitters were more likely to be Gen X/Gen Y advisors and embracing the move toward more fee- and team-based business than their Entrenched counterparts. Female advisors were most prevalent in the Fence Sitter group, and least likely to be Movers.

“This study illustrates the changing face of the advice industry,” said Sanjiv Mirchandani, president, National Financial®,a Fidelity Investments company. “While compensation clearly plays a role in advisor movement, the next generation of advisors is considering the whole package -- from the type of services they can offer their clients to whether the new firm is a fit for the entire family. Understanding these dynamics can help firm leaders recruit or retain advisors ‘on the fence,’ and help advisors better consider their options.”

“Advisors considering a move can learn a lot from the thousands of advisors who have preceded them,” said Michael Durbin, president, Fidelity Institutional Wealth Services. “Today there are a range of strategic partners and numerous firm models from which to choose, making the decision to move complex. The best insights often come from fellow advisors who have evaluated their options and made the switch.”

Lessons from Movers
Nine in 10 Movers (89 percent) reported they were happy with their decisions to switch firms, and 77 percent reported they were better off financially. Movers cited upside earning potential as the leading reason for making a move. Other top motivators included confidence clients would follow, firm reputation and better work/life balance. Advisors migrating toward independent models also cited the ability to offer better investment solutions and client service as key criteria for selecting that channel.

Movers reported that 79 percent of the clients they wanted to follow them moved to the new firm. These advisors were also able to strengthen their books of business, increasing their share of walleti with 54 percent of the clients who moved with them.

Key Considerations for Advisors Contemplating a Move

• Take time to examine the options – Movers spent, on average, eight months from the date when they first started to think about making a move to the date they actually left their former firm. During that time, advisors explored an average of two different business models before making a move, and 80 percent of those who moved to the RIA channel explored at least one external support option, such as a strategic acquirer or functional outsourcer.

• Talk to others who have moved – Advisors reported that one of the most important influences in their decisions to move firms was talking to other advisors who had made the switch.

• Prepare for paperwork and technology hassles – Movers reported some complications with the transition. Paperwork (20 percent) and technology systems and platforms (17 percent) proved to be the greatest hurdles in the switching process for Movers. Movers reported that aligning with external resources can help facilitate the operational aspects of a transition.

What’s Keeping Some Advisors on the Fence?
Fence Sitters reported that “life” often trumped work in their decisions not to move firms, citing family reluctance, “bad timing” for the family and commitments such as caring for aging parents. Families of Fence Sitters who were involved in the decision-making process more often discouraged a move (only 8 percent of their family members encouraged the move, compared to 23 percent who discouraged it).

Fence Sitters also reported fear of the unknown and concern about losing clients as top reasons for not making a switch; they, like the Entrenched advisors, were more risk averse than the Movers. These concerns were particularly acute for Gen X/Gen Y and female advisors.

The study found that Fence Sitters are an attractive group of advisors with the highest average assets under management (AUM) of all three groups -- $155 million AUM compared to $149 million for Movers and $147 million for Entrenched advisors. Yet, Fence Sitters were the least satisfied, with only 37 percent saying they are satisfied with their firm. Key areas of dissatisfaction included marketing support and flexible and competitive compensation.

Considerations for Broker and Advisor Firm Leaders and Recruiters

• Focus on areas of dissatisfaction – To help recruit or retain advisors on the fence, firms may want to consider focusing on areas of dissatisfaction, such as marketing support and compensation.

• Create a clear path – Offer strategies to overcome the most significant hurdles --from topics as broad as the “fear of the unknown” to concerns about losing clients and dealing with paperwork and technology transitions.

• Recruit the whole family – Family matters exerted a major influence on the decision to move or stay. Firm leaders may want to consider offering to meet with an advisor’s spouse about what the firm offers the full family.

• Provide straightforward information without being pushy – Advisors reported that the most helpful recruiters laid out the pros and cons and helped to weigh the options, without being pushy. Gen X/Gen Y and female advisors reported that they were particularly influenced by work/life balance issues, so recruiters may want to consider emphasizing these issues with next generation advisors.

• Connect advisors with others who have made the switch – Movers reported that first-hand experiences from others who had moved firms were a strong influence in their decision to move.


To help advisors considering a move toward independence, Fidelity offers a confidential referral service through which advisors can link to advisors who have already gone independent. The company consults on a range of options for independence -- from joining an independent broker-dealer to starting a registered investment advisor firm. Additional tools and educational resources are available at http://fidelity.com/goindependent.

Insights on Independence: Study Methodology
The 2013 Fidelity Insights on Independence study was conducted in collaboration with Bellomy Research, Inc. between November 7 and December 11, 2012 among 783 advisors, whose assets under management are more than $10 million (assets managed individually or as a part of a team) and belong to one of the following three categories: (i) Voluntarily moved from one firm to another (Mover), (ii) Considered a move, but decided not to (Fence Sitter), (iii) Never considered a move (Entrenched), all within the last 5 years. Bellomy Research, Inc. is an independent third-party research firm and not affiliated with Fidelity Investments. The study did not identify Fidelity Investments as the sponsor.

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About Fidelity Investments
Fidelity Investments is one of the world’s largest providers of financial services, with assets under administration of $4.1 trillion, including managed assets of $1.7 trillion, as of March 31, 2013. Founded in 1946, the firm is a leading provider of investment management, retirement planning, portfolio guidance, brokerage, benefits outsourcing and many other financial products and services to more than 20 million individuals and institutions, as well as through 5,000 financial intermediary firms. For more information about Fidelity Investments, visit www.fidelity.com.


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i Share of wallet: Percent of the clients who moved with advisor to new firm and for whom they increased the percent of total assets they invest.

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