More than half of all independent financial advisors say they would cut ties with their affiliated brokerages if the only other alternative under a proposed federal rule is to become a direct employee.

So suggests a study released on Jan. 18 by the Financial Services Institute, an industry group and lobby representing roughly 160,000 advisors and 85 financial services firms. The report warns that a Department of Labor rule proposed on Oct. 11 to prevent abuses of independent contractors could not only drive large numbers of advisors to end their affiliation with larger brokerages but also give them further incentives to work exclusively with well-to-do clients.

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