Investor Economics Insight May 2021

How advisors are compensated for their services has changed substantially over time, globally. The evolving competitive landscape, regulation and the growing scale of the business have been key factors driving change. Shifting distributor practices and the acceptance of fee-based compensation have contributed to the sharp decline in the use of embedded point-of-sale commissions over the years. In addition, the rise of ETFs, packaged asset allocation solutions and the growing usage of discretionary programs have played a pivotal role in rewriting the compensation formula.