White Papers

Now Could Be The Time To Go Independent - Sanctuary Wealth Services White Paper

Harriet Davies Editor - Family Wealth Report 5 June 2012

Now Could Be The Time To Go Independent - Sanctuary Wealth Services White Paper

Brokers have “as strong an incentive as ever to launch their own business and adopt a much friendlier business model that accelerates their growth,” according to a new white paper from California-based Sanctuary Wealth Services.

The industry “may be at a tipping point” in terms of the independent advisor movement, the white paper says, after wirehouse assets fell 7 per cent between 2007 and 2010, but climbed 21 per cent for independent advisors. Over the same period assets at self-directed online brokerages “grew even more.”

Factors driving the movement include the alignment of interests between clients and advisors, whereby advisors must focus on preserving and building assets, and the fact that advisors rely on referrals to build a practice, and so must deliver client satisfaction. Client retention rates are over 90 per cent for independent advisors, while they are around 60-70 per cent for Wall Street brokers, according to the paper.

There is also a trend towards entrepreneurialism, Sanctuary Wealth says, where HNW clients want an advisor who shares an entrepreneurial spirit, and advisors want the freedom to design and build a business.

Meanwhile, the compensation differential is “so narrow” between independent advisors and brokers – because today’s Wall Street brokers work “much like” independent advisors but without the agnosticism towards products and services – that “the open question is whether a wealth management professional derives any benefit from their Wall Street firm,” says Sanctuary Wealth.

To view the full white paper click here.

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