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Most Financial Advisors Long to Be Independent, Schwab Survey Says

Six out of 10 financial advisors at major firms are interested in becoming independent; 80% believe their clients would follow them, the survey found.

In a Charles Schwab survey of advisors at major financial firms, six out of ten respondents (59%) say the idea of being an independent investment advisor appeals to them. Nearly half of all respondents say that they would actually consider a move to independence. The surveyed advisors from wirehouses, banks and independent broker dealers are also confident about the strength of their client relationships, with eighty percent saying that they feel their clients are more loyal to them than to their firm.

It behooves Schwab to say that financial advisors want to go independent because its Schwab Advisor Services provides custodial, operational and trading support for approximately 6,000 registered investment advisors.

Not all advisors who are interested in independence want to start their own businesses from the ground up; more than half of the advisors participating in the survey (56%) say they would rather join an existing RIA than start their own firm.

The survey finds that the more familiar advisors are with the concept of being independent, the more likely they are to consider such a move. In fact, of those respondents who know someone who is or has considered becoming an independent advisor, 77 percent find the idea appealing.

Nearly half (47%) of all respondents know someone who is or has considered becoming an RIA, and just under half (46%) are familiar with the process of starting or joining an RIA. Of the group that is familiar with the process, 69 percent say that they are considering becoming an RIA.

When considering the perceived challenges to going independent, advisors surveyed cite having back office support (55%), obtaining new clients (39%), and having access to research and information to support investment decisions (30%) as the top three concerns.

Two hundred financial advisors participated in the survey, conducted by Koski Research from Oct. 7 to 13, 2009. Those surveyed work at more than 15 major full-service firms and 52 percent of the advisors in the survey have more than 10 years of investment advisory experience. The median assets under management of the respondents is $84 million.

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