Advisor Group Rolling Out Fee Cuts, Other Changes

Greg Cornick of Advisor Group

Advisor Group is counting on several new initiatives, including its plan to end advisor-paid ticket charges, to help boost its recruiting efforts in 2021, according to Greg Cornick, president of advice and wealth management at the firm.

"The advisor ticket charge structure is a thing of the past," he told ThinkAdvisor in a recent phone interview. "It's become a little bit tired and outdated," he said.

His comments came after Jamie Price, Advisor Group CEO and president, disclosed the move during the firm's recent ConnectED Canvas virtual conference.

During the event, Price explained that advisors will no longer pay transaction fees for new accounts starting on Jan. 1, 2021. Also, he said, ticket charges paid by advisors will end by mid-year, and the firm intends to reduce fees on advisor-managed portfolios (or wrap accounts) next year.

"We're taking our advisor managed portfolio asset-based pricing down by up to 50%," which translates to "between 9 basis points all the way down to as low as 3 basis points, based on asset levels," Cornick told ThinkAdvisor.

"Our changes to our asset-based pricing structure eliminates [the] conflict that's inherent in the advisor pay ticket charge structure," he said.

Now, there will no longer be a "perceived conflict with advisors choosing funds primarily based on the cost of that fund to the advisor," the executive explained. "With asset-based pricing, it's one fee, regardless of the choice of funds and the volume traded."

Also, Advisor Group thinks "that puts us on a really competitive position with anyone else in the industry," he said.

"In doing that, we know that the fiduciary trend is definitely going to intensify in the years ahead, and we want to be sure to [be out] in front of it," Cornick added. "We're leveraging our scale to help our advisors be in positions to handle that potential intensity. And, at the same time, make our prices more competitive."

Recruiting Momentum

When it comes to recruitment, Cornick said: "We've seen some real momentum," especially in the second half of 2020. "What we're seeing in the pipeline is definitely an uptick from what we saw in the first half of the year."

Recruitment in the first half "wasn't bad by any means — we were hitting the targets we wanted to hit internally. But it wasn't what we're seeing now, which is much stronger," he noted, but declined to provide recruitment data.

The pandemic "created some headwind versus what we would have liked to have seen," the executive conceded. Meanwhile, the company was also focused on its acquisition of Ladenburg that closed early in the year and then integrating that firm and its broker-dealers.

"I'd say we had those two elements at play in the first half of the year and yet our results were still very much what we had targeted or anticipated, and now we're seeing … an even stronger momentum" in recruiting, he said.

Cornick's prediction? "We're going to have a very strong first quarter of 2021 based on what we can see in terms of how it's flowing through from the top of the funnel down to the bottom."

What's "Resonating" With Advisors

As he talks to advisors and sees what's coming through its pipeline, "what's resonating is the combined organization of both Advisor Group and Ladenburg is creating a significant amount of interest" from advisors.

"Our ability to offer a multi-custodial platform is really resonating with advisors" who are considering a partnership with the firm also, Cornick said.

The company has also "done a bunch of things over the last few months that I think are also bolstering our recruiting results," he explained, noting the firm reorganized and centralized its recruiting teams and increased recruitment staffing.

"We've definitely put some capital behind this as a strategic priority for our business," he added.

The firm has also "put some investment and energy behind" marketing campaigns touting the Advisor Group brand, Cornick said, adding those efforts are "leading to a really strong close to 2020."

Advisor Group is also seeing especially strong interest in the legacy Advisor Group's MyCMO and My Succession Plan programs, according to the executive. The company started rolling the programs out across the Laudenberg firms and "the uptick in adoption rate there has been phenomenal – it has far exceeded… what we had anticipated," he said.

In addition, Advisor Group is experiencing strong advisor interest in the coaching and consulting program started by Laudenberg's Securities America that the company is now looking to expand throughout the firm, Cornick said. One of the firm's focus areas for 2021 is to roll that out across the firm, he noted, adding advisors are hearing about it mainly via word of mouth.

The firm also aims to enhance "the heck out of" its succession planning and acquisition lending initiatives to help advisors with their M&A and internal growth initiatives, he told ThinkAdvisor. It is also "providing advisors the opportunity to opt into a program that works with them to identify compatible partners within the Advisor Group network for a succession plan."