Indie Advisor

IBDs Dress Up Offerings to Retain Fee-Based, Tactical Advisors

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Some large independent broker/dealers are dressing up their offerings to retain and attract fee-based advisors who manage their clients’ assets on a discretionary basis. Last week, Cetera launched its Premier Portfolio Management, a program that allows advisors to trade in their client accounts for one all-inclusive basis point fee. Today, Raymond James Financial Services announced a new compensation model for hybrid advisors.

Barnaby Grist, executive vice president of wealth management for Cetera, said the firm was hearing from advisors that they wanted to be able to trade for their clients as much as they saw fit, without having to worry about the transaction costs to their clients. Under the program, there are no transaction costs, and for one fee, they can trade as much as they want.

That one fee, which ranges from 3 basis points to 35 basis points depending on the account size and the advisor’s assets, includes 700 fees wrapped into one, including billing, reporting and IRA fees.

The move also plays into the growing trend toward more active, tactical management.

“In a tactical program, transaction fees would be annoying so likely they have rolled such in as part of the platform fee,” said Chip Roame, managing partner of Tiburon Strategic Advisors.

Scott Curtis, president of RJFS, said the firm’s new compensation model is also designed for discretionary managers—advisors who are making manager and asset allocation decisions. To qualify, they must have north of $100 million in discretionary fee-based assets.

Under the compensation plan, advisors keep 100 percent of their payout, and pay a quarterly fee to Raymond James based on their discretionary AUM. They’ll pay 6 basis points on the first $100 million in assets, 3 basis points on the second $100 million, and 1 basis point up to $300 million. And Raymond James will reimburse 12b-1 fees to the clients.

Sure, it’s a way to attract large fee-based teams who have an RIA, but it’s also part of the IBD’s effort to keep the FAs they’d least like to leave. These are the guys most likely to associate with RIA aggregators such as Focus Financial, Dynasty, and United Capital.

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