ETFs in a Hybrid World
Investment News had a story yesterday (“Hunting for hybrids…”) on First Allied Securities push to attract financial advisors from independent broker-dealers and from wire house broker dealers. The idea is these financial advisors are dully licensed (Series 7 and 65) are mostly fee-based, however still draw a measurable amount of their revenue from commission based products (A Shares, C Shares, CEF, etc..). The hybrid platform being presented was developed by Pershing, but represents a big push from the custodial firms such as Pershing and Fidelity to support a hybrid approach for financial advisors. We believe this hybrid approach is good for the financial services industry, and it provides financial advisors with a broad list of investment options for their clients. While ETFs might be better suited for the fee-based portion of financial advisors clients, the reality is that many financial advisors have different type of clients with different needs, and certainly in some cases a commission based approach may be the most cost effective for a client. The ability to have these choices for financial advisors who are looking out for the best interests of their client is a great thing.