The ClientWise Blog

In just the past few weeks alone, I’ve come across no fewer than a half-dozen situations where highly successful advisors suddenly find themselves hamstrung by compensation decisions they made years or even decades earlier. As rapid practice growth (both organic and via acquisition) continues to accelerate, it’s a challenge that I expect will likely touch more and more firm principals in the foreseeable future.

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As the advisor industry continues to churn with speculation regarding the scope and extent of new forthcoming DOL guidance around the transparency of client fees, all indications appear that whatever mandates are called for, will require a significant amount of additional work to implement.

The underlying intent, however, is a noble one – to ensure that financial advisors are being totally transparent about the fees they are charging and the services being provided that comprise those fees. It’s merely another step in the evolution of an industry that has moved from brokerage commissions to asset-based fees. The challenge now lies in providing even greater clarity. 

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Perhaps more than any other industry, the financial advisory business is keenly attuned to benchmarks. You carefully watch major indices, craft investment portfolios to mirror or exceed certain benchmarks, and comb through the latest economic reports for signals. It’s only natural, therefore, when it comes to compensation most advisors would look to benchmarks in hopes of comparing their firm to what their peers are doing.

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