Broker-dealer CEO sees rapid escalation of brokers abandoning commissions in favor of fees

Commonwealth Financial's Wayne Bloom says brokers are turning in their Finra licenses and going fee-only

Nov 9, 2018 @ 2:24 pm

By Bruce Kelly

The chief executive of a leading independent broker-dealer is seeing a rapid escalation of brokers abandoning commissions in favor of charging clients annual fees.

Wayne Bloom, the CEO of Commonwealth Financial Network, said these brokers are dropping their license with the Financial Industry Regulatory Authority Inc. and formally becoming fee-only advisers.

"As the transition to fee continues to accelerate throughout the industry, I think we're on the front end of a wave of advisers dropping their Finra licenses to become exclusively fee-based," Mr. Bloom said Thursday at Commonwealth's annual conference in Austin, Texas.

"At Commonwealth, 75 advisers have already converted to IAR (investment adviser representative) or RIA (registered investdment adviser) status. Many more are exploring the same.This may not sound like a lot, given our 1,800-plus advisers, but to me it feels a lot like 1996 when [the firm's fee-based platform] was in its infancy, and we [identified] this is where the puck is going."

Brokers and registered reps are licensed through the Financial Industry Regulatory Authority Inc. Registered investment advisers, or RIAs, are registered with the Securities and Exchange Commission or the state their business is based in. Investment advisory reps, or IARs, work for an RIA.

The securities industry's trend toward charging fees rather than commissions goes back more than 20 years. Fees are a more stable source of revenue for brokerage firms than commissions. And advisers who charge fees are also tasked to work as a fiduciary with a higher standard of care, something their clients like.

Commonwealth has set up new service arrangements for fee-only advisers, he said. Such advisers pose unique operational nuances and compliance issues, and the firm is trying to be proactive in how it works with them, Mr. Bloom said.


What do you think?

View comments

Recommended for you

Featured video


Why a #MeToo story about the financial advice industry was important to do

Reporter Greg Iacurci and editorial director Fred Gabriel discuss the survey behind our cover story on sexual harassment in the workplace.

Video Spotlight

We started as a boutique firm with huge ambitions. Schwab was a perfect fit.

Sponsored by Schwab Advisor Services

Recommended Video

Keys to a successful deal

Latest news & opinion

10 millennials making their mark in Washington — and beyond

These next-generation leaders are raising their voices and gaining influence over financial advice regulation and legislation.

Warburg Pincus among private equity managers interested in acquiring Kestra Financial

Sources say Kestra is being valued at between $600 million and $800 million, about eight to 10 times EBITDA.

10 highest paid professions in America today

These are the top-paying jobs in the U.S., according to Glassdoor.

Former Merrill Lynch star broker Thomas Buck sentenced to 40 months in prison

He pleaded guilty to securities fraud in 2017; charged clients excessive commissions.

Rules for claiming Social Security at 70

Some individuals' benefits will begin automatically; others have to take action.


Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting It'll help us continue to serve you.

Yes, show me how to whitelist

Ad blocker detected. Please whitelist us or give premium a try.


Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print