Advisors More Likely to Switch Firms With Family’s Approval

Memo to recruiters: A focus on the financial advantages of switching firms may ultimately be less effective than demonstrating how a move might improve the advisor’s work-life balance.

That is because, behind the scenes, family members play a significant role in an advisor’s decision on whether to break away from his current firm, according to a new report from Fidelity Investments.

In front of the scenes, advisors aren’t much talking about their families in conversations with executive search consultants, says Mark Elzweig, a veteran recruiter with New York-based Mark Elzweig Co. That usually comes later in the process, when the advisor has made the decision to move.

“Advisors want their spouse to be on board with the extra work and potential stress of a move,” Elzweig (right) says. “Sometimes they’ll want their spouse to meet the prospective branch manager and provide a valued second opinion on his character and on the firm itself.”

Released Thursday, the Fidelity Insights on Independence Study marks the Boston-based firm’s second annual analysis on the motivations of those who move, consider a move or remain entrenched in their current firm.

The survey of 783 advisors, none of whom was aware that Fidelity sponsored the study, found that family members were encouraging in 40% of cases where an advisor ultimately moved. Yet in the case of “fence-sitters”—those advisors who considered a move but did not make it—only 8% of family members supported the idea of a switch.

Conversely, the study found little family resistance—just 4%—among movers, but significant discouragement—23%—in fence-sitting cases.

The Fidelity study, whose participants managed at least $10 million in assets, had encouraging news for advisors considering a switch. Overall, advisors who did so saw a 22% increase in compensation over 2008 levels.

While that was moderately above the 17% increase in advisors who stayed put, the raise in pay was 38% for advisors adopting an independent model.

Most of those making the move—89%— ended up happy they did so, with 77% saying they ended up better off financially.