The proposed rule, put forth by the Financial Industry Regulatory Authority, would require financial advisors to disclose the bonuses and other compensation they receive when switching employers. If the rule goes into effect, it could influence how advisors weigh their transition options.
Four leaders who spoke on a leadership panel at the Securities Industry and Financial Markets Association Private Client Conference expressed their opinions to Lorie Konish, of OnWallStreet last week:
“The fact that advisors have a financial incentive to change firms most likely will not be news to most clients,” Merrill Lynch Wealth Management Managing Director and Complex Director Jennifer MacPhee said, “but operating under the new rule could put financial advisors on notice: if they cannot articulate why the services or resources are better at a new firm, they should not move.”
“You will probably see a whole host of people that are probably going to start moving before this gets implemented,” said Wally Chapman, branch director and senior vice president – financial advisor at RBC Wealth Management.
“At the end of the day, I think our clients will value their relationships with the advisors and not just think about the financial side of it.”For Robert Samson, a managing director and Chicagoland market manager at Wells Fargo Advisors, with 13 branches and 225 advisors, the proposed rule is not a welcome change, but he has had a “lot of success” in recruiting and is not worried that will slow down.
[pullquote]“I don’t think it will have a dramatic impact on the recruiting market.”[/pullquote]Jason Chandler, head of the Wealth Management Advisor Group and Private Wealth Management at UBS, said that the industry should embrace increased transparency, while advisors should use their transition as an opportunity to have a frank conversation with their clients,
But for advisors who are looking for a way to explain the transition incentives to their clients, Chandler said, they may want to consider having a conversation that sounds like this:
“I feel like I was putting myself in a position to much better service your needs and here’s why. And by the way, I’m good at what I do and they pay me to do it.”