Morningstar: New regs could force out transactional advisors

Red exit sign

It’s a funny kind of ” consumer protection” that forces investors who prefer a commission-based relationship with their advisor into fee-based programs. Depending on how the DoL’s fiduciary standard is formulated, stock and bond jockey advisors could find their business model threatened.                                                                                      Here’s Morningstar’s Michael Wong discussing what happened in the UK after they introduced a fiduciary standard:

Michael Wong: Our summary assessment of what happened in the United Kingdom was that there was a decrease in the number of financial advisors, an increase in passive and a higher usage of fund platforms. At a company-specific level, there was an increase in explicit advice charging. That generally didn’t completely offset the loss in commissions and trail fees. Many of those industry and company-specific level effects that occurred in the United Kingdom have a high likelihood of also occurring in the U.S.

Let’s hope that SEC  chair Mary Jo White means it when she says that she’ll take her time on fiduciary standard rule making and get it right.

Photo: Jeff Montgomery


About Mark Elzweig

I am an executive search recruiter with an inside track on financial advisors, the asset management industry, and Wall Street. My work has appeared in numerous publications including On Wall Street,AdvisorOne, and Fund Fire. Journalists regularly seek me out, so you catch my bon mots in The Wall Street Journal, Research Magazine, Reuters, and more. You can follow me on Twitter @elzweig or you can reach me directly at 212-685-7070 or
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