Will DOL fiduciary rule drive RIAs to — or from — BDs?
September 2, 2016 by DANIELLE ANDRUS, JAMES J. GREEN
Will the passage of the DOL’s fiduciary rule drive top-producing reps away from broker-dealers? We asked the 2016 Broker-Dealers of the Year about a shift to fee-only business.
Eric Schwartz, Cambridge Investment Research, Division IV: We’ve been heavily into fees for over 20 years. Forty percent of our business was fees, even 20 years ago. We’ve been dealing with the potential for some number of advisors to go fee‑only, or what I call quasi‑fee‑only, which would mean the broker-dealer gives 100 percent payout or near 100 percent on fees and just collects on the other side.
Historically, we lose one or two advisors like that every year. It’s still a trickle, not a flood. The ones that do [leave] tend to be bigger. In the old days, somebody with $10 million or $20 million might form their own RIA and go fee‑only, but nowadays, because of the costs and the fact that you actually get audited and some of the difficulties of running your own RIA, we see it happening in $250 million to $500 million range.
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