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Most Indie-Bound FAs Want to Transition by 2020

By Garrett Keyes December 13, 2018

More than half of advisors planning on going fully independent would like to transition between 2019 and 2020, according to Charles Schwab’s Spectrum of Advisor Independence Study, released Wednesday. A further one-third of surveyed advisors are keen to break away after 2020, the study notes. And a vast majority of advisors say they are interested in independence for the increased freedom and control it affords their businesses, the study reveals.

Gaining control of an advice practice was a main reason David Jumper, partner of $10 billion HPM Partners, left Deutsche Bank for independence, he says.

Jumper has equity interest in HPM Partners, and this creates incentive to “want to see the firm grow and prosper,” he says. At the big banks and broker dealers, that incentive just isn’t present, he suggests.

Yet the search for higher pay and prospects of career improvement are also key drivers for advisors moving to independence. For Jumper, the prospect of career advancement factored into his exit from Deutsche Bank.

“Knowing that I have a long runway in front of me was very important in my decision to go to HPM Partners” he says. Going to an independent RIA can even create incentive to help another struggling partner because “the rising tide lifts all boats,” he claims.

But not every advisor wants independence.

Advisors may be forgoing independence because of a lack of understanding of what independence might truly bring, the study’s authors suggest.

One-third of advisors choosing not to go independent forgo breaking away because they are uncertain about the benefits of the RIA model, study data reveals. The study also shows more than 20% of advisors avoid independence because they are not confident their clients will follow.

Speaking with FA-IQ at the Charles Schwab conference in Washington, D.C., Shirl Penney, CEO of Dynasty Financial Partners, shares his insights into the movement towards independence and how it may continue to develop: