Being an Independent Financial Advisor

Why Fee-Based? In today’s marketplace, being a fee-based advisor is shifting from a competitive advantage to a competitive necessity driven by the demand for advice, the impending boomer wave, and the expanded role of the advisor. PriceMetrixfound that advisors moving clients more aggressively into fee-based accounts saw revenue growth of 47% over the past three years compared to an average growth rate of 21%; these advisors also had above-average growth in assets under management as well as return on assets. Other results from the study which support fee-based accounts include:

The average fee-based account is 46% larger than the average transactional account;

The average fee-based account generates three times as much revenue – $2,900 per account v. $870; and

Households with at least one fee-based account generate a return on assets that is 40% -70% higher than households that are purely transactional.

Fee-Based Benefits:

Client Interest. Fee-based pricing aligns the advisor’s interests with their clients.

Objectivity. Because the advisor is compensated on the value of their client’s assets, they can be unbiased in their use of investment products.

Predictable Revenues. Fee-based pricing provides an ongoing revenue stream that typically provides the advisor with more stable income.

Client Retention. Fee-based advisors provide ongoing investment advice as a component of their fee, which means spending more time with clients.

Unlock More Assets. Advisory relationships can translate into capturing more client assets through increased trust and the ability to provide broader services.

Valuation. Fee-based practices are more attractive to acquire, leading to a higher multiple for selling a practice and/or creating a succession plan.

Summit’s Advisory Solutions - When choosing the right independent broker dealer, you want to make sure any potential partner has a vast array of fee-based options. Summit offers a complete line of flexible fee-based programs so you can deliver personalized portfolios that meet the needs of each of your clients. At Summit, you have the ability to conduct your fee-based business under your own individual RIA or Summit’s Corporate RIA. And you can utilize platforms including Separately Managed Accounts (SMA), Mutual Fund/ETF Wrap, Advisor Directed, Client Directed, Unified Managed Accounts (UMA), Third Party Money Management and more.

Questions to Consider - Regardless of which platform you choose, there are several questions you may wish to consider. Because of the wide range of fee-based programs available, you’ll have to make some important decisions regarding what type of account(s) you’ll want to set up.

Will I personally manage the fee-based business?

Will my client, with my assistance, manage the account?

Will my client and I rely upon a third party professional manager?

What products will fund the portfolios?

Do I personally wish to be an asset manager or an asset gatherer?

Do I need “discretion?”

Which clearing platform offers the best program(s) for my needs and the needs of my clients?

Summit will assist you in finding the best fee-based option for your practice.

Clearing Firms - Summit offers two clearing platforms to execute your securities business and also manage your fee-based practice. Summit clears through First Clearing Correspondent Services (FCC) and through Pershing, LLC. FCC leverages their parent company, Wells Fargo Advisors, while Pershing utilizes their affiliate, Lockwood Advisors, to provide investment advisory services to customers. Both are excellent and nationally recognized firms providing clearing services to introducing firms like Summit. Choose the clearing firm you wish to execute trades and process your fee-based business. If you prefer, you are able to utilize both clearing firms. Both FCC/Wells Fargo and Pershing/Lockwood offer ongoing webinars, conference calls and education meetings to broaden your knowledge and help you build your practice.

FCC Fee-Based Business at a Glance - At FCC, you have an abundance of platforms from which to choose, ranging from programs managed by Wells Fargo Advisors, to outside third party managers, to those directed by you and your client.

Pershing Fee-Based Business at a Glance - At Pershing, you can choose from many different platforms. The Lockwood Advisors team is dedicated to helping RIAs implement thoughtful, deliberate investment solutions.Hybrid Advisor - If you are interested in maintaining your own RIA, while at the same time continuing to generate commissions, Summit’s hybrid RIA solution may be right for you. Summit’s hybrid solution allows advisors to benefit from the flexibility of having their own independent RIA, while at the same time leveraging the resources of Summit and its multiple clearing platforms to process their securities transactions. Advisors can also benefit from Summit’s proprietary Hybrid PRO platform.

Transition - Upon joining the firm, you will have an entire transition team dedicated to taking you through the process, from licensing and registration, to transferring your clients’ accounts and to establishing your office. From our perspective, no transition is complete until your new business is up and running at 100%.

[1] Source: PriceMetrix, May 2012