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7 reasons why wirehouses shouldn't milk the old business model

Once the chief protector, FINRA and its lapses may contribute to brokers' darkening picture

Author Ron Rhoades, Guest Columnist January 28, 2010 at 4:34 AM
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Ron Rhoades: Increasing attention is now being given to FINRA’s failures as a regulator

Ron Rhoades

Skip Schweiss

Skip Schweiss

January 29, 2010 — 10:08 PM

Excellent articulation of the fiduciary vs. sales model!

Brooke Southall

Brooke Southall

January 30, 2010 — 12:18 AM

I agree, Skip.

Ron has the ability to bring clarity to a very dense subject.

He also introduces thoughts about FINRA that I am hoping people can elaborate on [or present the other side of] in this comments section.


Stephen Winks

Stephen Winks

January 30, 2010 — 2:39 AM

The top brokers at wirehouses who are engaged in advisory services clearily understand what Ron is saying and have so for several years. The problem these advisors do not want to build the support infrastructure necessary to support fiduciary standing, they just want to use it. There are no firms that provide the necessary resources to support fiduciary standing that would safely bring easily managed and executed fiduciary standing (based on objective statutory criteria) within the reach of every advisor with the means to prove it.

When access to this faster, better, cheaper advisor value proposition becomes available, every broker in the business will move to advisory services (which is a much different business model than brokerage services) for the reasons Ron cites. The missing link to make Ron’s thesis actionable is the creation of large scale institutionalized support for fiduciary standing.

Brokerage and clearing firms will not create the enabling resources for fear of fiduciary liability, it is beyond the ability of under resourced advisors to create and beyond the skill set and interest of brokers to create. So who will fill the leadership vacuum? It will be someone (probably not a brokerage firm with heavy overhead) who sees highly disruptive innovation as a means to aggressively grow their business.


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