Wealth Management on the Move: The Moment of Truth
Report Summary
Wealth Management on the Move: The Moment of Truth
While financial advisors are mostly satisfied with their current employers, many may consider breaking away as retention packages become less effective.
Boston, June 7, 2011 – A new report from Aite Group examines financial advisors’ appetite for breaking away from their wealth management firms. Based on a March 2011 Aite Group survey of 151 employee advisors, the report sheds light on broker satisfaction, the effectiveness of retention contracts, and brokers’ plans for breaking away.
There is no end in sight for the breakaway trend that has plagued the wealth management industry and which peaked during the financial crisis. Leading wealth management firms retained many of their top-producing advisors by offering retention packages, but the breakaway trend may once again pick up momentum as the value of these packages wanes. Another wave of breakaway activity could hold significant threats for some firms and great opportunities for others. Large wirehouses are obviously at risk of losing top performers, but may find opportunities to pick up advisors from competitors. Second-tier brokerages and the independent channel are other avenues contemplated by breakaway advisors.
“Locked-in wirehouse advisors may be willing to leave their employer two to three years before their retention contract expires,” says Alois Pirker, research director with Aite Group and author of this report. “At that point, it will become clear whether the brokerage firm has done a good job catering to its advisors, or whether the lock-in contract was the sole binding element. The substantial sign-on bonuses currently offered by leading firms could be the catalyst that kicks off the next wave of breakaway activity.”
This 23-page Impact Report contains 16 figures. Clients of Aite Group's Wealth Management service can download the report.