Advisor Group is counting on several new initiatives, including its plan to end advisor-paid ticket charges, to help boost its recruiting efforts in 2021, according to Greg Cornick, president of advice and wealth management at the firm.
“The advisor ticket charge structure is a thing of the past,” he told ThinkAdvisor in a recent phone interview. “It’s become a little bit tired and outdated,” he said.
His comments came after Jamie Price, Advisor Group CEO and president, disclosed the move during the firm’s recent ConnectED Canvas virtual conference.
During the event, Price explained that advisors will no longer pay transaction fees for new accounts starting on Jan. 1, 2021. Also, he said, ticket charges paid by advisors will end by mid-year, and the firm intends to reduce fees on advisor-managed portfolios (or wrap accounts) next year.
“We’re taking our advisor managed portfolio asset-based pricing down by up to 50%,” which translates to “between 9 basis points all the way down to as low as 3 basis points, based on asset levels,” Cornick told ThinkAdvisor.
“Our changes to our asset-based pricing structure eliminates [the] conflict that’s inherent in the advisor pay ticket charge structure,” he said.
Now, there will no longer be a “perceived conflict with advisors choosing funds primarily based on the cost of that fund to the advisor,” the executive explained. “With asset-based pricing, it’s one fee, regardless of the choice of funds and the volume traded.”
Also, Advisor Group thinks “that puts us on a really competitive position with anyone else in the industry,” he said.
“In doing that, we know that the fiduciary trend is definitely going to intensify in the years ahead, and we want to be sure to [be out] in front of it,” Cornick added. “We’re leveraging our scale to help our advisors be in positions to handle that potential intensity. And, at the same time, make our prices more competitive.”
When it comes to recruitment, Cornick said: “We’ve seen some real momentum,” especially in the second half of 2020. “What we’re seeing in the pipeline is definitely an uptick from what we saw in the first half of the year.”
Recruitment in the first half “wasn’t bad by any means — we were hitting the targets we wanted to hit internally. But it wasn’t what we’re seeing now, which is much stronger,” he noted, but declined to provide recruitment data.