As the industry shifts into high gear to prepare for the implementation of the fiduciary rule, Advisor Group is cutting fees, reorganizing its platform and rolling out new educational resources for advisers.
Executive Chairwoman Valerie Brown says the firm has reached a "strategic inflection point."
"We believe this platform demonstrates our commitment to growth. We also believe that these changes will appeal to other broker-dealer firms that are trying to adjust to the new environment," says Brown, after a meeting with advisers in Boston to discuss the changes.
The moves could have a big impact as the firm's network of IBDs – which includes FSC Securities, Royal Alliance Associates, SagePoint Financial and Woodbury Financial Services – has more than 5,000 advisers and $160 billion in client assets.
Advisor Group will continue to support commission-based business, according to Brown. The firm will also implement changes to hold all accounts to the same standard.
"The platform we are laying out applies across retail and qualified accounts. So it is a consistent standard of care so that when you are talking to a client as an adviser, you don't have to explain the differences in standards of care," Brown says.
Among its other platform changes, the firm will introduce a new mutual fund-only, no-transaction fee platform for commission accounts as well as a new advisory product, called the Genesis Series, which provides access to institutional strategists and has a minimum of $5,500.
"We spent a lot of enormous amount of time working on our platform and with our partners to figure out how to do this economically," CEO Jamie Price says.
Price, who joined the firm last year, says Advisor Group is collapsing a number of fees into a single one-time bundled charge for these products.
"We felt it was time to simplify that and be competitive with the custodians directly," he says.
Phoenix-based Advisor Group is also launching a fiduciary and regulatory hotline and what it calls a "Wikipedia-like microsite" as educational resources for its advisers.
The regulator plans to ramp up scrutiny of bad brokers and electronic communications, among other new measures.
FULL SPEED AHEAD
The two executives are embarking on a 19-city tour to meet with advisers and answer their questions about the strategy.
Their announcement and platform changes come even as the future of the rule has been called into doubt.
Several groups, including the U.S. Chamber of Commerce and SIFMA, are challenging the rule in federal court. A ruling is expected soon, though fiduciary opponents lost two other cases in which they sought to reverse the regulation.
-
The new administration will have two paths it can take to stop the regulation from being implemented.
November 30 -
Will Chief District Judge Barbara Lynn be the first to rule against the regulation? Opponents of a case in Texas federal court have high hopes.
December 16 -
With a deep résumé representing Wall Street firms, Jay Clayton is seen as a business-friendly choice not expected to push major new regulations or ramp up RIA exams.
January 4
Some industry insiders anticipate that the new administration may try to replace it. Although President-elect Trump has not spoken out against the rule, some of his advisers have expressed a desire to eliminate it.
However, with the implementation date set for April 10, many firms have not been holding back on their preparations.
For her part, Brown says Advisor Group is making its changes regardless of whether the current rule goes into effect as is. Moreover, the firm's moves will help make it — and its advisers — more competitive.
"It will position them to attract new assets and serve their clients," she says.
