With the Department of Labor's new fiduciary rule for retirement accounts looming, the Advisor Group said on Tuesday it has made broad changes to its investment platform for its 5,000 advisers.
The firm, which has four broker-dealers in its network, said it will continue to support advisers who charge a commission to work with clients' retirement assets.
The changes outlined by the Advisor Group include simplifying and reducing fees on its advisory and brokerage platform; introducing a new advisory product that gives clients access to institutional money managers with minimums as low as $5,500 with no IRA custodial fee; and a mutual fund only, no transaction fee platform for commission accounts that eliminates IRA custody and transaction fees with a select group of mutual funds.
Brokerage firms have been wrestling with appropriate compensation for their registered reps and advisers under the new fiduciary rule for several months. In October,
Bank of America Merrill Lynch announced it was banning commission-based retirement accounts because of the DOL fiduciary rule. Other brokerage firms, including Morgan Stanley, have said they will continue to offer commission-based IRAs, using the regulation's best-interest contract exemption.
If the new Trump administration doesn't delay or eliminate altogether the DOL fiduciary standard, firms must begin implementing the new regulation in April and become fully compliant by January 2018.
Advisor Group is now charging a flat $9 fee for transactions on its advisory platform and $15 on its brokerage platform. In the past, advisers paid a series of charges per transaction, noted Advisor Group CEO Jamie Price. With the new fee structure, those fees have been simplified and cut.
“Now, there's one fee only, and it's bundled and significantly reduced from where it's been,” he said. “We want to make the platform compelling and competitive for advisers and their clients.”
The new, low minimum advisory account is called the Genesis Series and gives clients access to institutional managers such as Vanguard,
American Funds and iShares. Valerie Brown, executive chairman of Advisor Group, said the new wrap program's low account minimum of $5,500 was far lower than industry norms.
At other firms, there are mostly minimums of $50,000 and minimums of $25,000 for related advisory accounts, she said. “The new Genesis Series does bring those characteristics to a smaller account,” she said.
Advisor Group is comprised of FSC Securities Corp.; Royal Alliance Associates Inc.; SagePoint Financial Inc. and Woodbury Financial Services Inc. Ms. Brown and Mr. Price this week kicked off a 19 city roadshow to meet advisers and expect to discuss the new platform with over 3,500 advisers.
(More: Advisor Group taps wirehouse veteran Jamie Price to be CEO)
