The market for breakaway advisors “has never been more ripe,” but that’s not due to the Department of Labor’s fiduciary proposal, says Brian Hamburger, managing director of MarketCounsel, a consulting firm that helps those advisors set up their own RIA shops.
The rule, which could be finalized and issued as early as next month, is changing perceptions and increasing uncertainty in the advisor market, but it’s not the reason for advisors to leave a firm or remain there, says Hamburger.
Just as many advisors say the rule is a catalyst for departure as say that it’s a reason to stay put in their jobs, says Hamburger.
“It’s never that people are staying or going because of some impending regulatory decision because at the end of the day it’s not going to really disrupt their business,” says Hamburger. “They’re still going to carry on. They’re going to make minor modifications to their practice, but the decision to stay or go shouldn’t be hanging in the balance.”
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Perhaps not, but Norm Champ, the former director of the Securities and Exchange Commission’s Division of Investment Management, told a Washington summit Thursday that the rule will cause brokers to exit the business.
Whether or not advisors and brokers leave firms, changes will be required once the rule is finalized. One primary change will apply to the sale of commission-based products such as variable annuities and mutual funds with 12b-1 fees for retirement accounts. (The DOL rule applies only to retirement accounts.)