Let’s look at the past 12 months through the lens of some of the surveys we conducted during the year.

In our survey of executives who manage investment services businesses in banks and credit unions conducted one year ago, 62% said they expected the Department of Labor’s Fiduciary Rule to be delayed or modified by the incoming administration. Only 3% expected it to be repealed entirely. Today, those predictions look largely correct – the Rule has been modified to be friendlier to the industry and implementation has been delayed, and delayed again.


Source: Kehrer Bielan DoL Readiness Flash Survey, November 2016


It has been a bumpy road, and the path from December 2016 to today was by no means a straight line, but it would appear that the DoL fire drill is now largely over for most firms.

So how did the industry respond to the stress of preparing for implementation of the Rule, and how did it adapt to the uncertainty that President Trump’s election inserted into the landscape? We’ll know more when we release the results of the Kehrer Bielan Annual Industry Checkup in early March, but there is a lot we can already be certain of:

Firms are embracing financial planning as a means of deepening client relationships, driving managed money and life insurance business, and documenting the delivery of advice that is in the best interest of the client. The typical firm delivered 1.9 new financial plans to clients per month per advisor in 2016, up from 0.9 two years earlier. We expect this trend to continue in 2017.


Source: The New Importance of Financial Planning, Kehrer Bielan, 2016, sponsored by Cetera Financial Institutions; Investment Services in Financial Institutions: Best Practices, Kehrer Bielan, 2017, sponsored by LPL Financial


Advisors are transitioning their practices from transaction business to managed money, drawn to the recurring fees generated by advisory accounts and the prospect of moving up market to wealthier clients. Advisory revenue accounted for a quarter of all investment services revenue generated by banks and credit unions in 2016, and trail commissions accounted for another 19%. We expect recurring revenue to continue to make up a larger and larger share of the business going forward.

Fee compression and competition from low-cost providers are putting pressure on advisors to shed less productive clients and focus on capturing greater wallet share of their best prospects, and on firms to segment their delivery of advice. The need to serve less productive clients will feed the rise of call centers, digital advice platforms, and new advisor roles (i.e., Jr/associate advisors) as alternative means to deliver financial advice.


Source: Kehrer Bielan Omni Channel Delivery Flash Survey, August 2017


Thanks to everyone who supported our research efforts in 2017 by participating in our surveys, providing sponsorship support, or by sharing your experience at our study groups. Look for more original Kehrer Bielan research on the above topics in 2018. And look for the release of the Annual Industry Checkup: 2017/2018 in early March.

Happy holidays and warmest wishes from everyone at Kehrer Bielan. We look forward to working with you to strengthen your business and the industry in the year head.