Cambridge Investment Research on Tuesday joined a number of other broker-dealers who way they will continue to offer commission-based retirement accounts after the new DOL fiduciary rule goes into effect next year.
The Fairfield, Iowa-based broker-dealer, which has some 3,000 affiliated advisors, says it plans to apply the Best Interest Contract provision announced by the DOL for some commission-based accounts, while the discretionary advisory business will be supported through level fee platforms.
Commission-based retirement accounts will be acceptable at Cambridge, however the commissions must be “levelized by each pre-defined investment category so that all similar investment options have the same compensation structure,” according to the independent broker-dealer.
“We think every firm should have a unique value proposition while serving the best interests of the investing clients. Serving the needs of the client must clearly be the highest priority, along with observing regulatory requirements …,” said President Amy Webber, in a statement.
“Cambridge has long been a leader in fee-based accounts, but we believe the investing client and their trusted financial advisor must have access to appropriate choices they can consider for their unique retirement needs,” Webber explained. “With choice and compliance in mind, we’ve identified four business paths our advisors can choose from as we work together to forge the best path forward.”
The four business paths are non-retirement investing clients, small accounts, Best Interest Contract, and level-fee fiduciary. Cambridge adds that its Fiduciary Services team is creating Advisor Fiduciary Plans to “give each advisor insight into the accounts effected by the new DOL rule,” as well as the steps each rep should take to be in full compliance with the new DOL rule – which has an applicability deadline of April 10, 2017, and a full-implementation deadline of Jan. 1, 2018.
According to Investment Advisor’s 2016 Broker Dealer Reference Guide, Cambridge had gross revenues of nearly $700 million in 2015. Its advisors had average yearly fees & commissions of $230,000.
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