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Stockbrokers are ready to shed their sales culture, says SEI Investments study

The fiduciary standard has literally taken root over the course of six months, advocate says

Author Brooke Southall December 8, 2009 at 4:03 AM
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Knut Rostad: We see that brokers are ahead of the industry’s lobbies

fiduciary standard





Stephen Winks

Stephen Winks

December 9, 2009 — 2:03 AM

The brokers understanding that as fiduiciaries they (85%) could continue in commission sales and that they (91%)can still sell proprietary products is only true in an abstract way. Technically they are correct, but if they were to have access to the enabling resources (prudent processes, technology, functional division of labor, statutory documentation, conflict of interest management and advisory services support for each of the ten major market segments) necessary to safely acknowledge fiduciary status with an audit path and expert opinion letter to prove it, they would neither principally focus on commission sales or proprietary products. Both commission sales and proprietary products will not be prevalent in an advisory services enterprise affording fiduciary standing.

The portfolio construction innovations entailed in a fiduciary construct will facilitate a much higher degree of portfolio detail to be managed in real time than is possible today through packaged products because a faster, better and cheaper alternative for the comsumer is a fiduciary duty in the best interests of the consumer.

Thus, in principle the SEI research illustrates that brokers see the benefits of aligning their interests with the consumer, but in doing so, they haven’t yet realized a much higher level of counsel will emerge and that role and counsel of the advisor will be greatly elevated in the process. This accountability and transparency establishes professional standing not historically possible in the brokerage business and just initiates the proper resourcing of advisors which simplifies an unprecented level of investment and administrative counsel. We are on the verge of a rennaisance in the financial services industry where firms compete on the basis of the depth and breadth of their counsel rather than the size of the recruiting bonus offered to jump firms. Substance finally trumps flash, as brokers are having increasing difficulty in explaining what is in it for the consumer when they jump firms. The client wins in a very big way and so do enterprising advisors who have the necessary supporting resources to execute, none of which are readily at hand with in the brokerage industry today.


Mentioned in this article:

SEI Advisor Network
Top Executive: Wayne Withrow

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