Unlocking Real Value Blog

Poll: Most Assets Follow Advisors to New Firm

Published in FUNDfire – An Information Service of Money-Media, a Financial Times Company
By Gregory Shulas

Wealth advisors who leave for a new wealth management firm can expect to bring over the bulk of their existing clients’ assets during the transition. That’s according to a majority of FundFire poll respondents.

Roughly 62%, or 351 voters, said that half or more of an advisor’s assets move with them upon switching firms. That made it the top sentiment expressed in the FundFire poll on the percentage of assets that follow advisors who switch firms.

The majority sum included 42%, or 236 respondents, who said 50% to 75% of the advisor’s book make the jump to the new firm, as well as 20%, or 115 voters, who said 75% or more of assets come over during such transitions.

In contrast, 38% of the respondents, or 214 voters, indicated that less than 50% of assets follow an experienced advisor leaving for a new firm.

Of the minority tally, nearly one-third, or 167 voters, said 25% to 49.9% of existing assets leave the old firm with the departing advisor, while just 8%, or 47 voters, said less than 25% of client assets make the switch.

The FundFire poll’s findings contrast with a recent Wall Street Journal report that suggested only 25% of client assets are following departing advisors, compared to 50% in the past. This, the Journal said, coincides with a trend where clients are reportedly sticking with wirehouses when advisors depart, instead of moving with them.

High-net-worth investors are increasingly having second thoughts about making such transitions with their advisors, says Andy Klausner, founder of AK Advisory Partners, a strategic consultancy serving the wealth management industry. The hesitance can be attributed to how the credit crisis has decimated investor confidence levels, he says.

“Before, clients would go with advisor without thinking about it. Now they are giving a lot of thought to this,” he says. “Clients are becoming smarter. The trust factor is not what it was.” However, Klausner notes that most advisors will not leave a firm if they know at least 50% of clients won’t go with them.

As of 3 p.m. Tuesday, 565 FundFire subscribers participated in the survey.

Participants were self-selected and were only able to vote once. While wealth advisors were the poll’s main target, other FundFire readers had the ability to vote. The publication’s overall audience consists of asset managers, institutional investors, consultants, financial advisors and service providers.

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