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Can IBDs Really 'Go RIA'?
October 24 2023


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"It’s become even more imperative for broker-dealers to hold on to their existing advisors (and their assets) longer by offering them things like longer-term forgivable loans. He also points out that many of those forgivable notes are in the end paid for by the clients through transaction charges or fund-sharing fees, things the clients might not know and that regulators might not like. (See Hoyle’s story on page 60.) Hoyle and other recruiters say the race among IBDs to offer bigger payouts is going to pinch somewhere, and they think it means cutting down on services. “Some of the big B-Ds, their head count has shrunk, so the [ratio] of advisors to home office employees [has] changed. So maybe it was 9-to-1 or 10-to-1, more in that ideal range. Now we’re seeing some numbers where it’s closer to 15-plus” advisors for every home office staffer."

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“This is an industry wake-up call. The biggest takeaway is the SEC is ready to hold broker-dealers and RIAs to the obligation of care, and not just one of disclosure. This is a major milestone for clients and the industry alike,” said Simon Hoyle . “The SEC is sending a very clear message in this case that simply disclosing client conflicts of interest is not addressing the bigger picture of working within those best interests,” he added.

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