Insights Powered by Cogent Reports™
Despite the uncertain fate of the Department of Labor fiduciary rule, we already see advisors changing their business practices. According to Cogent’s The Future of the Financial Advisor™ report, advisors earning at least three-quarters of their total compensation from asset-based fees could comprise half (49%) of all financial advisors by the end of 2017, up from 38% presently. This shift toward fee-based compensation is primarily being driven by advisors in the National, Regional and Independent channels.
As the profile of advisors in the broker/dealer channels begins to more closely resemble that of RIAs, asset managers will need to rethink how to best support these advisors. Despite what appears to be a continued conviction in the value of active management, advisors are clearly under pressure to reduce fees. Mutual fund managers need to seize the opportunity to demonstrate the value of active management over the long-term, while also simplifying share classes, to help advisors and gatekeepers at their firms justify the merits of active management.