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Wealth Professional | 13 Apr 2015, 09:39 AM Agree 0
Fee-based advisors are addressing the negative optics of a two-tiered fee structure where a low rate is applied to larger AUM clients and a higher, less favourable rate to others.
  • Harley Lockhart CLU CHFC | 13 Apr 2015, 12:37 PM Agree 0
    1. Will not transparency of fees, while an issue of the past, be resolved by CRM2?
    2. If clients have not heard from their advisors in years, the advisors are breaching an existing MFDA regulation. Why are the current rules being enforced? If existing rules are not enforced, what is the point of making more?
    3. Perhaps there should be a study to determine which rules are not (or cannot) be enforced and eliminate them, freeing regulators and compliance to focus on those rules that are beneficial.
  • Wealth Advisor | 15 Apr 2015, 10:03 AM Agree 0
    The attraction of fee-based accounts for HNW investors (high net worth) is their scalability.

    No surprise that larger accounts pay proportionally less. It has always been so.

    The elephant- in- the- room question is this: What about the sub $125,000 investor?

    Scalability does not work for a $100/mo PAC either.

    Therefore fee-based accounts can't work for small investors -they are just not eligible to have a fee-based account.

    For the vast majority of commission based advisors, we tend to use fee-based accounts for our HNW investors and use the traditional commission based structures for small investors. You use the appropriate type of account -appropriately.

    If the CSA directive comes to pass and commissions are eliminated, we move from a two model system to a one model fee-based system so all commission based advisors become essentially, investment counsellors (without the CFA).

    That's a lot of competition for the HNW space and the small investor will have to find their own investment advice elsewhere.

    My view is that small investors eventually become large investors. Ignore the bottom 80% at your peril.
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