Other Voices

Wirehouses embracing fee-based business, but is it really the best?

Jun 15, 2014 @ 12:01 am (Updated 12:51 pm) EST

Readers reacted skeptically to the story by reporter Mason Braswell (Mason B below) about growth in the fee-based advisory business, particularly at wirehouses. Some pointed out that broker-dealers and brokers will use whatever model generates the most money, whether it is fees or commissions — or both.

What is Finra going to do when all brokers dump their brokerage licenses, as many have at the major wirehouses, because of the constant pressure on brokers to change the way they run their book, favoring fee-only over traditional brokerage business so managers hit bonus objectives? Brokerage or fee-based accounts should be up to the client, especially when brokers are dually licensed as a broker and RIA.” — Guest

Good point. Whatever the case is (even if the fiduciary rule is updated) I think it's going to come down to proper disclosure, and advisers will have to be able to justify why they put a client in said account. There's a lot of gray area.” — Mason B

As long as brokers are more focused on “cash-based bonuses” as you described, the RIA model will continue to thrive. I find it laughable that the wirehouses, if what you described is accurate, have finally embraced the fee-based model yet still find a way to make it seem dirty and not always most beneficial to the client.” — TheBlogger

Yeah, this way people will think you're fee-only and trust you. Then you can sell them all kinds of expensive stuff on the side.” — Mister RIA

As regulation of B-Ds gets a little worse each year, the IA fee business model is the way to go.” — Neal Nakagiri

Go to InvestmentNews.com/feebased to read the article and reader comments.

  @IN Wire

Jul 23 09:00PM
?What have you done for me lately?? http://t.co/SHO6gtVyld
Jul 23 08:43PM
The retail money fund houses are clearly happy. Fidelity: "a reasonable balance" Vanguard: "rules preserve integrity of money funds"

Career Center

Explore your opportunities and be informed for your next move.

Company Type
Firm Type
Clearing Firm
Presented by