Why 10% of Advisors Plan to Jump Ship This Year

While most advisors are poring over performance charts, others are polishing up their resumes.

An alarming 10% of the advisory workforce plans on switching firms this year through either individual decisions to leave or M&A deals, according to a new report from Cerulli. Whether it’s issues around culture, compensation, or a change of scenery, advisor moves are expected to continue to increase in the coming years. That’s compounded by a wave of retiring advisors that could leave the industry short about 100,000 new recruits over the next decade. While 10% is generally on par or lower than turnover rates for other industries, it could make an already cutthroat battle for advisory talent that much tighter. 

“The combination of increased advisor movement and approaching retirements will create a dynamic situation worth monitoring closely,” said Kevin Lyons, senior analyst at Cerulli.

Baby, Please Don’t Go

While making career moves is generally a good thing, advisors still have a lot to lose. Changing firms can result in significant financial consequences, particularly due to the possible loss of clients and assets. The report found advisors at broker-dealers may have the most at risk:

• Advisors who switch between broker-dealer firms typically lose about 22% of their assets, which does not include normal client attrition.
• BD-based advisors who move to an independent firm can expect to lose around 18% of assets, while independent advisors moving to another indie shop generally lose about 11%.

“Recently, there has been a noticeable trend of financial advisors transitioning to independent practices to gain greater autonomy,” Lyons said, adding that many of these advisors cite access to improved technology as a driving factor. “As more advisors switch firms, transition support becomes increasingly critical in facilitating that process.”

Let’s Stay Together. Advisors are also worried about how they can port over client assets. A top deciding factor in leaving a firm is access to resources to help transition client portfolios, according to the report. Improved technology can also play a major role in their decision making, Lyons said. “Firms that support advisors with these resources will better retain talent,” he told Advisor Upside.