The lure of independence for breakaway brokers has surged to a five-year high.
The number of new advisors filing with the SEC as RIAs increased 20% in 2017 from the year before and has swelled 59% over the past five years, according to an analysis by Schwab Advisor Services.
Large wirehouse teams with more than $300 million in AUM are finding independence particularly alluring. Those firms accounted for 30% of the 238 firms registering with the SEC last year, more than double the percentage of breakaway teams that went independent in 2013.
Although large brokerage firms are dropping out of the
“Advisors who want to be business owners and entrepreneurs will continue to seek independence,” Beatty says. “We have done non-protocol transitions and have seen that where there’s a will there’s a way.”
"Barriers to entry are low," says Schwab's Jon Beatty.
While large teams are increasingly gravitating toward independence, Beatty points out that firms with between $100 million and $300 million in AUM still make up 70% of new RIA registrations.
“Barriers to entry are low, so it’s easy to set up a firm,” he says. “And because technology is now so robust, small firms can have back offices built with superior systems.”
However, independence isn’t for everyone, he conceded.
“If you’re not interested in running a business yourself or being an entrepreneur and running a franchise, independence is probably not right for you,” Beatty says.
Asked if he thought RIAs should
“But we’re open to it if that the preferred model,” he says.
