Tailwinds driving advisors to independence
According to Vipool Desai, president at Ara Compliance, the trend toward independence is also driven by several other factors.
“The typical advisor is already in their late 50s,” he told Wealth Professional. “Many are thinking about their path to retirement and how to maximize their payout out as they exit the industry.”
For younger advisors, retirement may not be an immediate consideration. But some may have accumulated a sizeable amount of assets under management, and find themselves chafing under the constraints and structures of their dealer’s risk management, marketing and, product approval policies, as well as their dealer’s oversight of their business.
“There’s also a drive among large, national firms to increase profit margins at the expense of advisors,” Desai says. “Over the years, we’ve seen measures like raising the minimum AUM for advisors, playing with the compensation grid, and downloading more head office expenses to the advisors.”
Desai notes that though certain large firms may be charging more for administrative expenses, they might not necessarily be investing in technology or upgrading their back-office systems. The upshot for advisors, in that case, is higher costs without the benefits of added productivity and business competitiveness.
