PriceWaterhouseCoopers ("PWC") released a report suggesting that the landscape for financial advisors may be shifting towards more objective, performance-based compensation.
The report indicates that the financial advisor of the near-future may be compensated based on the long-term performance of client assets:
In this increasingly competitive environment, compensation of advisers will change to reward long-term investing, with less money earned from short-term “churning” of assets, Crosby said. The business is changing from rewarding advisers for having a lot of clients to basing pay on how well the accounts perform, he said.
This compensation shift would presumably better align the incentives of financial advisors and their clients.
The compensation shift may be accompanied by changes in the fiduciary status of financial advisors. As reported earlier, the Obama administration has proposed that all financial advisors act in a fiduciary role with their clients.
Source: Bloomberg
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