Anyway You Want It

Many RIA practices have an important need to continue to support the commission side of their business even though the major portion of their revenues are derived from fee income. If the income scales are disproportionately tipped, say 85% in favor of fees versus 15% in commissions, many advisors start to question if it makes sense for them to forego the commission stream because of increased costs, regulation, and risks.  When making this decision, there are several factors to consider including the important choice of broker/dealers and custodians that can easily support your needs, as well as how to minimize the costs, risks and regulatory burden associated with offering both commission and fee based services.


“It’s critical in today’s regulatory environment to affiliate with a reputable and fee friendly broker/dealer, according to Dennis Kaminski, Executive Vice President and Chief Marketing Officer of Summit Brokerage Services in Boca Raton, Florida. “Servicing the fee based and Hybrid model advisor requires the broker/dealer and their Registered Investment Advisor entity to truly understand the plethora and complexity of today’s fee based platforms as well as the specific needs of the advisor. It’s paramount they have a solid infrastructure in place to execute transactions, allow access to a nationally recognized custodian, and offer outstanding marketing and more importantly compliance support.”


Many industry studies portray the slow but steady shift from commission only business to a combination of both commissions and fees, eventually becoming the lion’s share of the practice. Several studies claim that by 2017, seventy five percent of the total number of registered representatives will be involved to some degree in fee based services.


“As many financial advisors slowly transition towards that goal and their revenue scales tip in opposite directions, they will have to initiate a major realignment of their practices. Once increased streams of recurring fee based revenues flow in, the advisors may question if it makes sense to continue to offer services to a dwindling number of commission based clients.  The answer may depend in part upon the ultimate source of the commission revenues and the clients’ preferred choice of either paying per transaction or based upon the assets under management.  If a good portion of the built up commission business is on “auto pilot,” for example, from a steady and healthy flow of 12b-1 fees, why would an advisor want to extinguish this additional source of revenue?


In these instances it is paramount to affiliate with a “fee friendly” broker/dealer that is willing to support their growing fee based services but also be willing to help support their commission based side of the ledger.


Summit Brokerage Services is positioned to be able to accommodate the many complex needs of today’s fee based and Hybrid advisor,” Kaminski added. “We welcome those advisors exploring the shift into the fee based arena. Summithas the resources, talent and experience to make this a relatively easy transition for the advisor”.


For more information on Summit Brokerage Services, visit or contact us at (800) 354-5528.


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