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.”