Working for a wirehouse, brokers have to work hard building a book of business to keep up with the production numbers that are expected from them. Retaining their clients is a major focus as well. This is why it is not surprising for most clients to follow their wirehouse brokers when they breakaway to an RIA/independent.
According to a report from the Aite Group,
Wirehouse brokers tend to breakaway because the brand name of the wirehouse has been tarnished. After the financial meltdown, wirehouses still managed to make a fortune leaving a bad taste for advisors and clients alike. In fact, some clients initiate the process of leaving wirehouses for RIA firms on their own.
Since wirehouse brokers already have clients who will follow, the transition from wirehouse to independent is much smoother. Advisors don’t have to build a book from scratch and have a solid foundation. According to the Aite survey,
“Sixty-eight percent of independents who originated from wirehouses have chosen fee-only or dually registered RIAs.”