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Affluent Investors Relying on Advisors for Financial Support

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Industry researcher Cerulli Associates has observed a notable increase in the number of affluent investors turning to financial advisors for assistance with their finances. While this response can be attributed to the recent macroeconomic uncertainty and market volatility, it also reflects a growing trend of investors seeking a broader range of services from a single financial firm. In response, large advisor shops have expanded their offerings to include services such as estate planning and tax preparation.

Merrill’s Compensation Structure Overhaul

Merrill Lynch is currently revamping its advisor-compensation grid, primarily by eliminating a policy that had reduced earning potential for many brokers. Starting next year, advisors at Merrill will receive full compensation for most brokerage transactions, with only heavily discounted transactions being an exception. In addition, Merrill is introducing a new growth award program for advisors who bring in three new households with at least $500,000 in assets each year. These advisors must also achieve net new money flows equivalent to 7.5% of the previous year’s assets and liabilities.

Schwab Maintaining Sweep Rate

Charles Schwab recently announced that it will not be increasing the interest rates it pays on clients’ uninvested cash. Despite investors moving billions of dollars into higher yielding options, Schwab’s sweep account will maintain its 0.45% rate. Schwab President Rick Wurster stated during this year’s Impact conference that the firm’s rates remain competitive compared to similar offerings from other industry competitors. Wurster also encouraged advisors and clients to consider whether they view the cash in these accounts as investment assets or explore alternatives for higher-yield returns.

Rudy Adolf Retires from Focus Financial Partners

Rudy Adolf bids adieu. After leading Focus Financial Partners since its founding in 2004, CEO Rudy Adolf has announced his retirement. Adolf, a well-known figure in the wealth management industry, took Focus public in 2018 and recently orchestrated a sale to a private-equity firm. Focus Chairman Dan Glaser, operating partner at Clayton, Dubilier & Rice, Focus’ majority investment partner, will step in as interim CEO while the firm searches for a permanent chief executive.

Finra Takes Action Against Broker for Aggressive Trading Scheme

Merger and Acquisition Activity in Decline?

M&A deals back down to earth? In a potential shift, the number of mergers and acquisitions among registered investment advisory firms may see a decline compared to the previous year. Consulting and investment bank DeVoe and Company’s quarterly deal report revealed that after a strong start, M&A activity dropped significantly in September. This trend makes it unlikely that enough transactions will occur in the fourth quarter to surpass 2022’s numbers. However, DeVoe anticipates that interest rates decreasing and aging founders seeking succession plans will lead to a return to a record-breaking year in 2024.

Have a great weekend.

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