Two independent studies released by financial firms vying for relationships with current and former brokers in the US prove just how highly sort after top producing advisors are in the current environment.

The two largest custodians of Registered Investment Advice firms in the US – Fidelity Institutional Wealth Services and Schwab Institutional – separately but simultaneously released surveys showing brokers are torn between “going independent” and staying within the brokerage fraternity; and that most recent RIA converts are happier and earning more money than before.

The Schwab study surveyed a group of recent RIA converts to measure their happiness and financial well-being after making the decision to leave a brokerage firm.

The Schwab survey found that three-quarters of those surveyed cited a preference to work for themselves; 86 per cent of the advisors said that going independent brought them more income than expected; 63 per cent said the opportunity for greater long-term financial success was a very important reason to go independent; and an overwhelming majority (98 per cent) said they would make the decision to go independent again.

The Fidelity survey gauged advisors who are still currently working within brokerage firms in the US and found that more than one-third of brokers have recently considered either starting their own firm or joining an independent broker-dealer or RIA.

The Fidelity study also found brokers are highly sort after: 34 per cent of all brokers surveyed indicated they have already been offered a sign-on bonus to switch firms and that brokers at wire houses and regional firms report the highest percentage (46 per cent) of sign-on bonuses. Moreover, 27 per cent of all brokers – 39 per cent among wirehouse and regional firms – still expect to be offered an incentive to switch firms within the next month.

"Recruiting top producing brokers… is intensifying as brokers, many of whom would not have been in play a year ago, now consider moving," said Sandy Metraux, executive vice president, National Financial (a Fidelity company).

Both Schwab and Fidelity provide custody and services like client management and portfolio accounting tools to RIA firms and have been instrumental in luring large teams of advisors away from big named Wall Street brokerage firms.

So far in 2008, Schwab Institutional – the largest third party custodian of RIA assets in the US– has aided more than 60 advisor teams become independent firms. In 2007, 114 teams went independent with the assistance of Schwab, representing $9.2 billion in assets.

“While the number of advisors moving to independence has grown steadily for several years, we’ve seen the trend accelerate in recent months as more advisors face inevitable change at their existing employer and begin to think about what step they want to take next,” said Bernie Clark, senior vice president of Schwab Institutional.

On the subject of competition for talent in the current environment, Ms Metraux said: "Broker-dealer firms and RIAs understand that in the current market environment attracting top brokers and advisors can be a critical component to their business growth efforts, as loyal high net worth clients may often follow their trusted advisors.”

The Fidelity study found, despite the damage the current market downturn has caused in their clients’ confidence, 61 per cent of the brokerage advisors surveyed believed that investor confidence in the health of their firm is the same or higher than one year ago. According to the survey the brokers believed 60 per cent of their clients on average would follow them to their new firm if they were to go independent, with 31 per cent saying that they would expect three-quarters or more to follow.

"With the unprecedented events on Wall Street in the past couple of months, we are seeing brokers evaluate the independent model at a very rapid pace," said Gail Graham, executive vice president, Fidelity Institutional Wealth Services.

The Schwab ‘Recently Independent Advisor Study’ was conducted by an independent research firm from 16 September through 3 October this year among 55 advisors who recently started, or went to work for, an independent RIA firm.

The Fidelity and National Financial Broker “Attitude Research” was conducted online within the US by an independent researcher between 29 September and 8 October, 2008 among 127 producing financial advisors currently working at national wirehouses, regional brokerages, insurance broker-dealers, or bank broker-dealers.