Why Top Financial Advisors Are Leaving Big Firms

RIAs will control nearly one-third of advised assets by 2027, up from 27% today, virtually switching spots with wirehouses¹. The question is why so many financial advisors are leaving their wirehouses to become RIAs.

78% of advisors who leave their firms cite compensation as a primary reason². The focus of financial advisors has shifted dramatically in the past decade or so. Previously, the decision to stay or leave was based almost exclusively on upfront payouts, meaning which firms were offering the biggest pay cheque. Today, it’s more about independence. As advisors’ understanding of their practice and true market value increases, the trend has shifted towards them exploring and adopting more independent options.    

According to J.D. Power’s 2024 U.S. Financial Advisor Satisfaction Study, over a third of employee advisors and roughly 41% independent advisors say they may not stay with their current firm in the next one to two years³.  

Additionally, advisors are striving to provide a seamless and data-driven client experience. Recent industry surveys reveal that less than 10% of advisors feel completely satisfied with the technology in use⁴. A majority of them end up wasting precious time and resources switching between disconnected systems to find information or re-enter data. 

Some key challenges advisors face include:  

Lack of competitive compensation  

Even after working long hours, advisors feel undervalued or underpaid. If the increase in their payouts is not in proportion to the revenue they are generating for the firm, it can lead to burnout. Young advisors who are looking forward to career progression may just leave for better opportunities in terms of money.  

Dependence on legacy technology  

Not all wealth management firms use advanced technological tools. Many of them still rely on outdated, fragmented technology. These legacy systems often lack flexibility and require extensive workarounds, increasing the need for manual intervention. The result could be slow decision making.

Less control and flexibility  

RIAs have better autonomy over their business practices as compared to advisors working with firms. Most advisors want the flexibility to choose products for their clients as opposed to the constrained environment of wirehouses. This flexibility empowers them to pursue their clients’ best interests, deepen their relationships, retention rates, and overall results.