Move ‘guaranteed’ to cull young advisors

Move ‘guaranteed’ to cull young advisors

Move ‘guaranteed’ to cull young advisors The current fight over fees is compromising the future success of young colleagues who’ll struggle to make a living the same time robo-advisors rake it in, argue seasoned players.

“Most advisors that have been the business for a while and have large existing book will benefit from the elimination of DSC's and go to a no load with a larger trailer fee,” says Fredericton advisor Dan Moore. “You must remember from when you started your business you had no clients and no revenue. I have been in the business for 14 years and would not have made it without some sort or upfront compensation. I'm not alone.”

Regulators are looking to provide transparency to clients when it comes to fees, any move to ban DSC funds would likely hurt those newest to the business who are simply trying to survive financially until building a decent sized book. With the average age of advisors around 58 in Canada, the industry’s succession plan may be limited as the number of new entrants trickles to a close.

“The demographics are against us on this,” says Moore. “I see this as a very big problem.”

The loss of FEs and DSCs may be less of a problem for standalone robo-advisor firms positioning themselves to clients who’ll have nowhere else to turn when there aren’t enough human advisors to fill the needs of average Canadians.

“The effect on upcoming new advisors with a no load structure is ridiculous,” says Moore. “They won’t survive.”
 
8 Comments
  • Kevin O'Brien 2015-05-22 10:27:13 AM
    I was at a meeting for Advocis in Toronto (fall 2014) and a comment was made in regards to England's out-right banning of commissions on financial products...Perhaps the desired result of a 100% ban on commissions is that the government will be able to provide voters total dependence on social programs in return for votes... this was a sobering thought but nevertheless it was mentioned to the room.
    Post a reply
  • Niki 2015-05-22 10:47:31 AM
    This is going to do a few things.

    1) Advisors will have to re-think their succession plans--if they have one.
    2) Advisors will have to think about selling or sharing a portion of their books to start-up young advisors. How else are they going to have a succession plan.
    3) The competition in the Industry will be reduced by the number of advisors who will not be able to start as FAs without assets. Are you cool with that?
    4) With fewer Advisors (a drop in 33% maybe?), the Industry will need to get a grip on the Education levels--including the achievements prior to becoming an advisor. Master's or PHD anyone? More invested in knowledge--the better. Physicians, Surgeons, Dentists, Lawyers--all have years of education. Why not FAs?
    5) Selling one's book may become illegal too! Ever thought about that?
    Post a reply
  • Kathy Waite Your Net Worth Manager 2015-05-22 11:54:18 AM
    Funny I keep hearing about the average advisor being 58 but I don't see any books for sale. I think they are all sitting on them collecting the trailers!
    My son "the new generation" was in negotiations with a guy recently who wouldn't sell to him because he uses ETFS and they " are dangerous" the level of knowledge some of the old timers is laughable. They just sell own brand garbage.

    Post a reply