Sentiment high among US brokers, advisors

Overall sentiment among U.S.  brokers and advisors is at its highest point since the financial crisis first hit, according to Fidelity Investments’ 6th Broker and Advisor Sentiment Index study. Overall sentiment was 7.6 on a scale of 0 to 10.

The study also found that GenX/Y advisors, female advisors, advisors working in teams and those who earned more compensation from fees than from commissions typically had higher assets under management than their peers, making these segments likely to drive the future of the advice business.

Sentiment, as measured in this study, is a composite metric that measures brokers’ and advisors’ satisfaction with the support received from their firms in the areas of running their practices, growing their businesses, professional development and the balance between their work and life, as well as other interests.

In 2010, brokers and advisors were more focused on developing professionally and growing their practices. In this year’s study, brokers and advisors were taking action to generate new business and were placing greater importance on compensation, developing professionally and receiving marketing support.

“Four years after the financial crisis, brokers and advisors are back in ‘growth mode’ – focused on developing themselves professionally and expanding their practices,” said Sanjiv Mirchandani, president, National Financial, a Fidelity Investments company. “By recognizing these shifts in sentiment, as well as key segments poised for growth, firm leaders can help to ensure they are meeting the needs of today’s brokers and advisors, while also positioning their firms for future success.”

The study found that while men still dominate the broker and advisor fields, more women are entering the field, with women representing 13 percent of the profession, compared to 87 percent of men.

According to the data, the average age of advisors today is 46, with GenXers and Generation Y representing more than half of the industry.

Solo advisors still dominate the market, but Fidelity’s research found that those who worked in teams were more profitable.

The majority of advisors’ current compensation comes from commissions, but the study found that advisors would like to see their compensation structure shift toward more fee-based business.

“Aligning growth strategies to reflect these key segments and advice models may help drive profitability for brokers, advisors and their firms -- and importantly, it may help them better serve their clients,” said Michael Durbin, president, Fidelity Institutional Wealth Services. “With investor demographics and needs constantly shifting, it is critical for firm leaders to consider how their talent strategies and advice models align with those shifts.”

The study’s advice to brokers and advisors is to engage with Gen X/Y to discuss growth strategies for their business, fine-tune professional development and pay attention to the growing number of women entering the advisory field. It also suggested that broker and advisor firm leaders consider putting a plan in place to recruit more women, work as teams as they seem to be more profitable and move toward a fee-based compensation model to remain competitive.

The 2012 Fidelity Broker and Advisor Sentiment Indexwas fielded through an online survey during the period of March 15–29, 2012. Participants included 1,207 advisors from across multiple firm types who work primarily with individual investors and manage a minimum of $10 million in assets under management.

Fidelity Investments is one of the world’s largest providers of financial services, with assets under administration of $3.7 trillion, including managed assets of $1.6 trillion, as of Aug. 31, 2012.


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