In the last few decades, fee-only consultants have pioneered the way Americans invest. Registered investment advisors (RIAs) are bringing in more money into the exchange traded fund (ETF) universe, and mutual-fund firms and broker-traders are taking notice.
Fee-based advice has been “the single biggest driver of ETF sales through financial intermediaries,” remarked Anthony Rochte, a senior managing director at Boston-based State Street Corp.’s money-management unit.” The fee-only advisor has an incentive to keep overall costs low and that makes ETFs much more competitive.”
Registered advisors with the U.S. Securities and Exchange Commission or other state regulators, are legally bound to put a clients’ interest first – RIAs do not take sales commissions or payments from fund providers, says Bloomberg.
Most RIAs charge around 1% to 2% of the client’s portfolio, which makes it a large incentive to guide the clients in the right direction. Christopher Battifarano, senior investment partner at GenSpring, said that “the change to the fee-only model doesn’t guarantee you’re going to get better investment performance, but we do sit on the same side of the table as the client.”