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Transitioning to Fee

One of the most important trends in the retail brokerage industry over the past decade is shifting away from traditional, commission-based business and moving toward arrangements where clients pay an advisory fee based on the value of the holdings in the account.

While many investment firms have encouraged advisors to transition their accounts and households to a fee-based model, advisors sometimes lack guidance on what is the best transition approach and its potential financial impact.

In this edition, the following key takeaways are presented:

  • almost all books contain both ‘purely fee’ and ‘purely transactional’ advisors.
  • individual clients are increasingly choosing to hold both kinds of accounts.
  • an increase in fee asset concentration of an advisor’s book leads to an increase in the overall return on assets.
  • advisors choose to transition their books to fee at a varying pace.
  • the transition pace has a meaningful impact on results in terms of growth and quality of the overall book.

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