No More Hybrid Advisors?

Todd J Pack, President and Chief Operating Officer of Financial Advisors of America LLC, has contributed a piece to Investment News on how the regulatory environment is making the hybrid advisor model unwieldy for the advisor and burdensome for the broker-dealer.  It appears that FINRA and state regulators are going to be enforcing "private securities transaction" oversight rules on broker-dealers whose reps who conduct asset management business under their own RIAs.  This outcome has been developing for 15 years, as FINRA has been putting pressure on BDs to assume the oversight responsibility "voluntarily."  Along with a number of related issues, including exorbitant state review fees, the viability of the business model on the broker dealer's part is diminishing.  Advisors should prepare to make the decision on which side of the fence they are going to conduct their business.