News Mentions & Press Releases
For the first time, more of advisors’ total revenues are coming from fees than commissions.
A new white paper by CLS Investments examines how more advisors are embracing fee-based business models and transitioning away from a commission-based transactional approach.
According to the paper, titled Making the Switch: The Benefits of Moving to a Fee-based Model, advisors now derive 46% of their total revenues from fees, versus 45% in commissions.
The paper says that in the coming years advisors are expected to derive more than 55% of their revenues from fees.
CLS Investments, LLC (“CLS”), a third party money manager and a leading manager of exchange traded fund (“ETF”) portfolios released the latest white paper in its Advisor IQ series today, Making the Switch: The Benefits of Moving to a Fee-based Model. The white paper extrapolates trends based on reported findings from Cerulli that highlight a broader trend among advisors to move from commission-based to fee-based models.
“At CLS, we have a front row seat to the industry’s top advisors, which allows us the ability to see how industry trends are born and continue to evolve,” said CEO of CLS Investments, Todd Clarke. “We’ve developed this white paper as part of our Advisor IQ series to encourage an open dialogue around how professionals in our industry can make strategic business development goals that simultaneously benefit their clients.”
Everyone is talking about increased market volatility in this new year.
Perhaps just as important is the question of whether increased volatility presents unique opportunities to capture alpha. If so, how do you go about finding alpha in this environment?
We asked these questions of a few ETF strategists and financial advisors. Here’s what they had to say:
Scott Kubie, chief strategist, Nebraska-based CLS Investments:
Volatility matters for emotional and fundamental reasons. At CLS, we believe investors have a capacity to bear risk. We call it their risk budget. When an investor is exposed to more volatility than they can tolerate, they often make rash decisions and reduce risk at the wrong time.
8. iShares MSCI Quality Factor ETF
Scott Kubie, chief strategist at CLS Investments in Omaha, Neb., expects stock market volatility and a less liquid bond market in 2016. So the firm is betting on large- and mid-cap U.S. stock with positive fundamentals through the iShares MSCI Quality Factor ETF (ticker QUAL).
“High quality firms tend to exhibit lower risk characteristics than most companies and produce sufficient free cash flow to fund much of their internal investment,” Kubie said.
When making investment decisions, Americans come across plenty of unfamiliar terms and murky concepts. In addition to the investments themselves, the financial services industry is replete with its own vernacular and jargon.
One word that’s bandied about is “fiduciary.” A fiduciary manages another party’s assets and has a legal and ethical obligation to put the other party’s interests first. For a financial advisor, that means helping a client make decisions in his best interest, even if it means reduced compensation – or no compensation – for the advisor.
For clients, that distinction can be confusing. Not all advisors are fiduciaries, and it’s not necessarily clear whether any given advisor is or not. In addition, the alphabet soup of financial-industry credentials often leads investors to believe a person with a string of letters after his or her name is a fiduciary. That’s not always the case.
Asset-management firm CLS Investments and compliance consulting firm MarketCounsel recently surveyed 200 independent financial advisors about the fiduciary standard. It asked about advisors’ own perceptions of the term, whether they considered it worthwhile to describe themselves to clients as fiduciaries and whether the term should be applied uniformly throughout the industry.
Eric Clarke, CEO of Orion Advisor Services, hopes a new app on Orion Connect will make it easier for advisors to use data to make decisions and implement strategies.
Orion Business Intelligence, which launches Thursday, is a digital update to the Business Metrics Reporting tool that Orion advisors have used for three years.
All of the analytics capabilities remain – transaction types, top performers, cash flows, client demographics, new accounts opened in a given time frame, or changes in assets under management over time – but advisors can now access them whenever they want instead of waiting for the monthly printed report to arrive. Business Intelligence also brings a major visual overhaul and allows advisors to take deeper dives and look at custom data sets.
Most advisors expect the Federal Reserve to raise interest rates 25 basis points on Wednesday, in line with most analysts’ predictions, and they don’t believe the Fed’s announcement will have a significant impact on the markets. But advisors said they’d be more concerned if the Fed didn’t raise rates this week, or if the agency takes a more aggressive approach.
“Since this expected announcement has been telegraphed to the market, I wouldn’t expect a significant reaction,” said Marc Pfeffer, senior portfolio manager at CLS Investments in Omaha, Neb. “Personally, I believe it would be more of a negative to both the equity markets and the long-end of the treasury market if they decided not to raise.”
SIFMA’s Economic Advisory Roundtable anticipates an interest rate hike of 25 basis points this week, with survey respondents citing improving labor conditions, readings of financial developments and inflation or inflationary expectations.
Given the aggressive lobby campaign the industry is waging against the Department of Labor’s proposed fiduciary standard for retirement plan advisors, you might think that: (1) most insurance and financial professionals are averse to applying the term to themselves; and/or (2) understand what being a fiduciary entails.
Think again. According to a new study, the vast majority, or 80 percent, of advisors considered themselves to be a fiduciary. Yet nearly 4 in 10 (37 percent) deem the term “meaningless” because they lack an understanding of a fiduciary’s function.
CLS Investments and MarketCounsel disclose these findings in a survey of more than 200 independent financial service professionals about the fiduciary standard of care. The study gauges advisor perception with regards to the term “fiduciary:” how advisors understand the term, whether they deem it worthwhile to use the term in describing themselves with clients, and whether it should be uniformly applied across the financial advisory industry’s channels.
CLS Investments, LLC (“CLS”), a third party money manager and a leading manager of exchange traded fund (“ETF”) portfolios, recently joined with MarketCounsel, a leading business and regulatory compliance consulting firm to the country’s preeminent entrepreneurial investment advisors, to survey over 200 independent financial advisors about the fiduciary standard of care.
The objective of the survey was to gauge advisor perception with regard to the term “fiduciary” — how advisors understand the term, whether they deem it worthwhile to use the term in describing themselves with clients, and whether it should be uniformly applied across the financial advisory industry’s many channels.
CLS Investments, LLC (“CLS”), a third party money manager and a leading manager of exchange traded fund (“ETF”) portfolios, recently joined with MarketCounsel, a leading business and regulatory compliance consulting firm to the country’s preeminent entrepreneurial investment advisors, to survey over 200 independent financial advisors about the fiduciary standard of care. The objective of the survey was to gauge advisor perception with regard to the term “fiduciary” — how advisors understand the term, whether they deem it worthwhile to use the term in describing themselves with clients, and whether it should be uniformly applied across the financial advisory industry’s many channels.
Perhaps the most striking finding of the survey was the general lack of regard that advisors have for the current usage of the term “fiduciary.” Generally, respondents said working solely in their clients’ best interest is more important than promoting that they are held to the fiduciary standard — nearly 70% said being a fiduciary is not determined by how you are compensated, or how the standard of care is disclosed. Supporting this conclusion, 75% of overall respondents say acting solely in a client’s best interest defines a fiduciary. Further, 37% of respondents deemed the term “meaningless,” due to a lack of understanding of its function, and 39% felt that regulatory language, definitions, and standards are not clearly defined.
“While a clear definition around the term is needed to move forward, the core of the issue is larger than the industry’s lack of regulatory clarity around the term fiduciary — the real issue is that the retail customer doesn’t understand what that term really means,” said Todd Clarke, CEO of CLS Investments. “Until we can help the lay investor understand what it really means to be served by a fiduciary and why they should work with one, I think we will continue to see these inconsistencies and feedback industry-wide. Without demand from the investor, we will maintain the status quo.”