When I go to industry events these days, I frequently hear about how difficult it is for independent broker-dealers to implement any major new initiatives that drive value for the financial advisors they serve until there is total clarity on what the regulatory landscape looks like after the Labor Department’s fiduciary rule goes into effect.
So the thinking goes, once we are in a post-DOL landscape, firms can jumpstart the various programs that make the most sense, adjusting as needed for whatever the “new normal” environment specifically dictates.
Unfortunately, this presents a “go big or go home” false choice for the industry. And worse, it’s a false choice that may be built on an incorrect premise — There are no guarantees that after implementation of the DOL rule there won’t be significant further modifications made to it, or that the implementation phase itself gives birth to further areas of uncertainty that require additional clarification.
With this context in mind, it’s time for independent broker-dealers to refocus on low-cost and easily implemented opportunities to add significant value to the financial advisors they support. Along the way, this could provide a substantial opportunity for such firms that seize the moment to differentiate themselves from the rest of the pack.
Three low-cost, “low-hanging fruit” opportunities for firms to add value to advisors and their businesses are the following:
1. Promptly pay commissions. Obviously, due to regulatory trends and shifting consumer preferences, the number of advisors that rely solely on commissions is declining rapidly. Still, this compensation structure continues to be the best option for many clients and, thus, remains a big part of numerous advisor businesses across the country. However, it’s not unusual today to hear advisors say they wait a month or more before they receive commission-based income.