within the new firm, get some exceptions made and have moreagency over how he was going to conduct himself.
What’s the future of the wirehouses and other broker-
dealers look like?
LOUIS Regardless of how much market share the independent channel picks up, for the most part, it’s been at theexpense of the wirehouses. There’s always going to be a reallyimportant place for the wirehouse firms, because so manyadvisors thrive under that model.
Even though they put up with some bureaucracy and
loss of control, they do their best when they don’t have to
worry about anything except their clients, where they can
go out and deliver an entire firm to clients as part of the
value proposition. What those advisors value is simplicity,
We’ll continue to watch many teams leave that channel, but
the wirehouses aren’t going anywhere. If anything, they’re
becoming larger, because their advisors are growing faster
than ever in those channels. They’re home to the most produc-
tive advisors as far as average production today. They also have
a tendency to grow organically, because they have great sales
cultures and platforms that appeal to many clients.
It’s All Hands on Deck asBDs Enter Rougher Waters
Here’s why so much of our industry’s financialfuture is tied to compliance and what thatmeans for today’s broker-dealers.
The next few years will be all about regulation, as broker-dealers figure out the proper balance of RegulationBest Interest’s disclosure, tracking and recordkeeping.
Advisors at some broker-dealers tell us the new disclosures required to satisfy regulators have become suffocatingly unacceptable, though not much has changed atother firms.
The future balancing act for most broker-dealers, though,will be implementing enough disclosures and recordkeeping to avoid fines but not so much that their advisors findthe paperwork and related requirements oppressively longand complex.
Geneos Wealth Management President and ChiefCompliance Officer Jodee Brubaker-Rager feels that by having its own technology firm, the BD has been able to makethe required changes to supervise and electronically maintainrecords in order to comply with the new rules. Still, creatingmultiple disclosure forms and supervisory systems has beena bigger project than it first anticipated.
But Geneos is the exception and not the rule. Many firmsare likely to discover how deficient their record keeping iswhen fines are imposed on them over the next year or so.Plus, disclosures and supervision aren’t the only aspect of RegBI that will be problematic going forward.
Reg BI has demonized regulators’ perception of commission-based products to the point that they look at, forexample, variable annuities as “bad” and also earning commissions (rather than fees) as “bad.” If an advisor or compliance officer is being questioned over a variable annuitysale, they find it to be: You are guilty until you can proveyour innocence.
Many firms have become downright paranoid about commission-based sales and the potential blowback from regulators, making advisors’ ability to have commission-based business increasingly difficult.
This likely will be a primary driver in reduced commission
sales in the coming years, and that will especially affect BDs
that rely more on sales tied to commission-based mutual
funds, variable annuities, alternative investments and fixed
index annuities. A d o