If you want to hang a shingle and sell investment advice, it pays to work for a wirehouse first.
That's the take-home message of a survey of 402 financial advisors released this morning by Aite Group, a Boston-based research firm focused on finance.
On average, those who go it alone after working at a captive company have a five year lead in building a book over competitors who started an advisory from scratch, according to the report.
Not only do captive advisors not have to worry about the logistics of running a company at the outset, but they can seed their startup with incumbent accounts. On average, the captive brokers who broke free took 55% of their managed assets with them; and almost one in four such advisors took their entire book.
After five years in business, half of breakaway advisors had more than $10 million under management, versus 18% of professionals who had never worked for larger company.
Not surprisingly, the respondents most reluctant to recommend going independent were those who have known nothing else.
It's easier than ever for financial advisors to go it alone. Big brand names lost some of their luster to investors in recent years. And there is a rash of new technology from companies like Charles Schwab and Fidelity to support independent accounts. None of this has been lost on those plugging away at Bank of America, Smith Barney, UBS or Wells Fargo.
Indeed, those with a corporate pedigree are muscling out old-fashioned entrepreneurs on Main Street. Since 2006, breakaways have outnumbered new advisors by a ratio of four to one, according to the Aite report.
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