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(June 26, 2003) Compliance costs for mutual fund dealers and their advisors are “going through the roof,” according to Berkshire’s chief operating officer Frank Laferriere, who also serves as the company’s chief financial officer. With major firms like Cartier, IPC and Assante already on the block, Laferriere says there will be some compression among dealers struggling to cope with rising costs and big hits on the revenue side.
“We expect compliance costs will force out advisors and entire firms,” Laferriere said during a panel discussion at this week’s IDA conference in St. Andrew’s by-the-Sea, New Brunswick.
Despite the challenges of the last few years, there has not been a wave of consolidation on the IDA platform — with the number of retail firms holding steady at about 150.
But Laferriere expects the same won’t hold true for the MFDA, where he says firms are struggling with an ever-burgeoning regulatory burden and high payouts in comparison to the IDA model. “Distribution is a crazy business. We bear all the risks. The burden of regulation is getting excessive.”
Laferriere says advisors on the MFDA platform are feeling the heat, too. “On the MFDA platform payouts are high versus the IDA side. New rules and regulations will squeeze margins. The advisor and clients are being downloaded the costs as well.”
Despite the bleak picture he paints, Laferriere says Berkshire is holding up quite well, with $6 billion in assets under management generated from nearly 600 advisors. “And we are recruiting. We expect our sales force to grow over the next few years.” As for the possibility of buying up other firms, Laferriere says the firm is “looking” but adds that price would be key to any decision.
At Berkshire, advisors are encouraged to move to the IDA platform and become securities licensed. “It’s all about empowering the advisor,” Laferriere says. “The MFDA model is too restrictive from a product selection point of view.” About half of Berkshire’s nearly 600 advisors are now securities licensed. “So they can handle equities and things like separately managed accounts.”
Laferriere says many MFDA dealers handle client equity trades through a referral arrangement with the securities arm of the firm. He is concerned that regulators may eventually curtail these arrangements, which makes the move to the IDA platform even more attractive.
What do you think about Laferriere’s insights on consolidation and the status of other Canadian firms? Is he on the right track? Share your thoughts and opinions in the the Talvest Town Hall on Advisor.ca.
Filed by Darin Diehl, Advisor.ca, ddiehl@advisor.ca
(06/26/03)
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(June 26, 2003) Compliance costs for mutual fund dealers and their advisors are “going through the roof,” according to Berkshire’s chief operating officer Frank Laferriere, who also serves as the company’s chief financial officer. With major firms like Cartier, IPC and Assante already on the block, Laferriere says there will be some compression among dealers struggling to cope with rising costs and big hits on the revenue side.
“We expect compliance costs will force out advisors and entire firms,” Laferriere said during a panel discussion at this week’s IDA conference in St. Andrew’s by-the-Sea, New Brunswick.
Despite the challenges of the last few years, there has not been a wave of consolidation on the IDA platform — with the number of retail firms holding steady at about 150.
But Laferriere expects the same won’t hold true for the MFDA, where he says firms are struggling with an ever-burgeoning regulatory burden and high payouts in comparison to the IDA model. “Distribution is a crazy business. We bear all the risks. The burden of regulation is getting excessive.”
Laferriere says advisors on the MFDA platform are feeling the heat, too. “On the MFDA platform payouts are high versus the IDA side. New rules and regulations will squeeze margins. The advisor and clients are being downloaded the costs as well.”
Despite the bleak picture he paints, Laferriere says Berkshire is holding up quite well, with $6 billion in assets under management generated from nearly 600 advisors. “And we are recruiting. We expect our sales force to grow over the next few years.” As for the possibility of buying up other firms, Laferriere says the firm is “looking” but adds that price would be key to any decision.
At Berkshire, advisors are encouraged to move to the IDA platform and become securities licensed. “It’s all about empowering the advisor,” Laferriere says. “The MFDA model is too restrictive from a product selection point of view.” About half of Berkshire’s nearly 600 advisors are now securities licensed. “So they can handle equities and things like separately managed accounts.”
Laferriere says many MFDA dealers handle client equity trades through a referral arrangement with the securities arm of the firm. He is concerned that regulators may eventually curtail these arrangements, which makes the move to the IDA platform even more attractive.
What do you think about Laferriere’s insights on consolidation and the status of other Canadian firms? Is he on the right track? Share your thoughts and opinions in the the Talvest Town Hall on Advisor.ca.
Filed by Darin Diehl, Advisor.ca, ddiehl@advisor.ca
(06/26/03)
