Meeting

Traditional broker/dealers adding direct platforms

Thu, 13/03/2014 - 16:07

Traditional broker/dealers are considering a direct model, according to research from Cerulli Associates.



"Firms within traditional advisory channels are beginning to consider direct broker/dealers as legitimate competitors and adapting their business models accordingly," says Patrick Newcomb, senior analyst at Cerulli.
 
"There are several benefits to launching a direct platform at a traditional broker/dealer, including creating a funnel for younger advisors that need help prospecting new clients, and to help advisors cultivate younger clients with small account balances."

The first quarter issue of The Cerulli Edge-Managed Accounts Edition analyses direct providers and eRIAs including the impact of the direct channel on traditional broker/dealers. 

"Many traditional firms already maintain a packaged mutual fund advisory (MFA) programme," says Newcomb. "MFAs make up the largest assets within the direct channel, and many broker/dealers have an existing MFA programme."


 
Cerulli warns that firms outside of the direct channel need to tread carefully when entering the direct space. If positioned incorrectly, it could appear that the home office is trying to compete with its advisors, instead of offering them an additional service. 


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