Survey Says . . . Independence Is the Way to Go

According to a new report from Cerulli Associates, “Advisor Migration: The Changing Landscape of Retail Distribution,” independent financial advisors, including registered investment advisor firms, independent broker-dealers, and dually-registered advisors, are gaining market share. The report’s author, Scott Smith, says investors’ and advisors’ disillusionment with the big wirehouses is driving the change.

Notably, the Cerulli report estimates that the major wirehouses lost $188 billion in client assets through September of 2011 as advisors left to embrace their independence. According to the report, we independent advisors increased our market share from 29% to 35% in 2011, while wirehouses’ 50% market share fell to 43%. If the trend continues, Cerulli expects that by the end of this year, independents and major wirehouses will each have a 39.3% share of assets under management nationwide. Cerulli expects independent advisors to surpass the wirehouses by 2013.

Nevertheless, it is important to note there is a difference between an advisor with an independent broker/dealer and an advisor with an independent registered investment advisor.  As you search for an independent advisor you should consider using the Focus on Fiduciary Questionnaire as a guide.

Clearly, recognition of the importance that advisory relationships be governed by the fiduciary standard where advisors always put their clients’ needs ahead of their own is gaining momentum.  And it’s about time. Our nation's investors deserve nothing less.