Ranks of Fee-Based Advisors Expected to Swell

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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.

Percentage of Compensation from Asset Based Fees

For more information on how to monitor new competitive forces impacting the financial advisory marketplace, download the fact sheet for our new The Future of the Financial Advisor™ report.

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This entry was posted in Brand and Messaging, Financial Services and tagged , , , by Meredith Lloyd Rice. Bookmark the permalink.
Meredith Lloyd Rice

About Meredith Lloyd Rice

Meredith Lloyd Rice is a vice president in Market Strategies' Syndicated division. She manages the firm’s syndicated research products focused on the financial advisor market and is the lead author of the Advisor Brandscape® report. She has more than 15 years of experience managing research initiatives in the wealth management industry and has explored a wide range of business issues on the client and supplier side. Prior to joining Market Strategies, Meredith was an associate VP at Chatham Partners where she oversaw a team of researchers and managed the overall design, analysis and interpretation of large-scale studies for institutional financial services clients. Meredith earned an MBA from Thunderbird School of Global Management and a bachelor’s degree from Colgate University. She is a former collegiate rower who now gets her exercise chasing after her 2-year-old daughter and Clumber Spaniel.

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