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Cover Story: Top Reasons Advisors Go Independent

Featured in InsuranceNewsNet Magazine and written by Shad Besikof in January 2020

10 Reasons Financial Advisors Choose To Go Independent

Although the registered investment advisor market is far more mature than it was 10 years ago, the space continues to experience significant growth and increased market share from large wirehouse and bank models. Let’s look at some statistics.

The traditional wirehouse/bank advisor-managed asset channel market share has declined by 10% since 2007, according to the Cerulli Report on U.S. Advisor Metrics of 2017. There were 147 “breakaways” who transitioned to independence in 2018, which is a significant increase from the same period in 2017, according to Echelon’s RIA M&A Deal Report.

In addition to the active breakaway market, there were 44 merger and acquisition transactions in the fourth quarter of 2018 alone, in which advisors were acquired by other RIAs. The movement to independence and advisors being acquired is surging.

There are two main reasons for these phenomena: Most advisors are in their mid- to late-50s, looking to retire within the next five to 10 years and want to maximize enterprise value. Assets-under-management wealth is expected to rise from $63.9 trillion in 2017 to $101.7 trillion by 2020, according to PwC AWM Insights.

Advisors want to have the freedom and flexibility to provide the best possible client experience as true fiduciaries and differentiate themselves in order to compete for more wallet share. With overall wealth increasing in the U.S., there will be continued demand for the services that independent advisors deliver.

For those considering taking part in RIA market share growth and/or maximizing their succession plan with an eye on ensuring that their clients are well taken care of, there are several compelling reasons to consider.

Read full article in InsuranceNewsNet Magazine (page 50).