Advisor Group cuts pricing for wrap fee accounts

Advisor Group is lowering fees on adviser-managed portfolios, commonly known in the industry as wrap accounts, by as much as 50%.

The pricing for such wrap fee accounts, based on client assets, now starts at nine basis points, with larger accounts as low as three basis points. Advisers determine the total fee to charge to clients, and the asset-based fee comes out of the total client fee.

Lower fees benefit advisers and their clients. There has been jockeying among broker-dealers since the Department of Labor's now-defunct fiduciary rule to change or reduce pricing models in order to diminish conflicts of interest created by certain charges and commissions.

And Advisor Group, a network of close to 11,000 financial advisers, will also not raise various affiliation fees on advisers in 2021, according to CEO Jamie Price, who spoke Tuesday afternoon to kick off a virtual version of the firm's annual meeting, called ConnectED.

“Our wrap pricing on adviser managed [accounts] has been extremely expensive,” Price said. “We’re going to cut it by 50%,” he added, with the new pricing model among “the most competitive on the Street,” and leveraging Advisor Group's “scale and our clout.”

“Adviser-managed asset-based pricing — sometimes referred to as a wrap — enables advisers to charge a fee that is not tied to the number of trades they make, removing any potential conflicts of interest based on the cost of the trade,” Price said in a follow-up conversation with InvestmentNews. “We are focused on supporting the ability of our financial professionals to serve their clients in a fee-based relationship, which is where the future of wealth management is heading.”