← Back to Press

Post-Fiduciary: Leverage Digital Tools to Stay Profitable

By Min Zhang

The newly published fiduciary rule is, at first glance, a win for consumers and will result in some big changes for the industry. However, some of these changes will have negative side-effects for advisors, who will face more regulatory overhead costs which translate to lower profits.

Additionally, it may not actually benefit the client to switch to a fee-based account, and may exclude smaller clients from proper advice. These externalities of the rules that were intended to protect investors become particularly tenuous when a retiring client rolls over her 401(k) accounts.

Let’s first look at the options for financial advisors who have a broker registration:

  1. Keep the commission business with the BIC exemption, which requires complete transparency of compensation, individual client signature, and demonstrating the representation of a client’s best interest;
  2. Converting to fee-based, which means more responsibility as a fiduciary, but potentially lower profitability for smaller accounts;
  3. Drop smaller commission-based accounts and let them fend for themselves; or
  4. Just execute client-directed trades instead of providing advice.


Read more here.

This article originally published April 13, 2016 on Financial Planning

facebook icon twitter icon linkedin icon

This is the main content. To display a lightbox click here

This is the lightbox content. Close