How to successfully transition to a fee-based practice
March 30, 2016 by Ed McCarthy
Earlier this year Omaha, Nebraska-based CLS Investments published a white paper on the benefits of switching to a fee-based model.The stats reported in the paper show that as of year-end 2014 and for the first time, fees exceeded commissions (46 percent versus 45 percent, respectively) as components of advisors’ revenues. Only 11 percent of the survey respondents were commission-only; the remainder were either fee-only (23 percent) or using a mix of fees and commissions in varying degrees (66 percent).
“The upcoming Department of Labor (DOL) fiduciary ruling is likely to accelerate the switch to fees,” says Gabriel Garcia, head of relationship management at Pershing Advisor Solutions in Jersey City, New Jersey. “Whether you’re a registered representative or a hybrid or a dually registered (advisor), you’re going to be faced with having to deal with the DOL proposal in some way, shape or form. Most likely (it) will be addressed not through the BIC (best interest contract) exemption but through some sort of leveled compensation, fee-based advisory services, if you will.”
