IBD and wirehouse ‘dinosaurs’ fighting for survival

On Wall Street

October 10, 2017
Louis Diamond Quoted
By Tobias Salinger

Broker-dealers have seen the writing on the wall — adapt to the changing industry or risk extinction, according to a new report from Cerulli Associates.

The fiduciary status of RIAs does leave them in a stronger position than IBDs with prospective clients, according to recruiter Louis Diamond of Diamond Consultants. He views the fiduciary rule as the primary concern facing IBDs due to its direct impact on longtime revenue sources like 12b-1 fees.

BDs such as PKS, Mutual Securities and Private Client Services serve as scaled-down “friendly broker-dealers” for dual-registered advisors, Diamond says. The approach, which is becoming more popular, helps advisors avoid the administrative fees and pay grids of larger BDs such as LPL, he says.

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