The percentage of financial advisory business in the bank channel that is being done on a fee basis hit a high point last year of just 14% of revenue, as reported in a new survey by BISRA. And however slowly, that percentage is on the rise.
Moreover, those bank-based advisors who are doing more fee-based business than that say it’s the future of the industry. The following are tips from advisors who have made this shift, and the benefits they’ve seen.
“We were doing
“It was a fundamental shift,” he recalls, “and it took three to four years to do, but it didn’t hurt our business.” For one thing, he explains that 80% of his revenue had been coming from 20% of his clients, mostly wealthier ones. “And most of them shifted readily to the fee-based platform we were offering them,” he says. He admits there was a short period where gross revenue “pulled back,” but he says part of that was the result of his moving in 2008 from
Meanwhile, up in
Buss likes that his new heavily fee-based business allows him to spend more time with clients and build deeper relationships. And it also allows him to spend more time with bank colleagues, which he says “really helps with referrals.”
That little blot doesn’t sting much though. As a result of all his fee-based business, he says that not only is his gross revenue up from
“I think every advisor should go fee-based,” says Buss. “It attracts higher-net-worth clients, and you can be a lot less pushy.” He explains, “I used to be pretty aggressive about trying to get that commission. Now I’m not worrying about the next big sale. I’m working with clients to help them achieve their goals.”
Wells Fargo’s Reich agrees that advisors should be moving to a fee-based model, but he phrases it as a warning: “I’d tell anyone you can do this, but if you don’t, you’d better go home and pray each night that your clients don’t run into a guy like me, because they will want to make the change to fee-based.”
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