Competition from RIAs is "grossly overstated," Matt Card, a spokesman for Charlotte, N.C.-based Bank of America, said in an interview. "We continue to read about it but we're not seeing it in our business."
Rachelle Rowe, a spokeswoman for Wells Fargo, said the San Francisco-based firm "has long encouraged advisors to adopt" fee-based client relationships. She declined to comment on how strong a competitor the company viewed fee-only advisors to be.
Karina Byrne, a spokeswoman for New York-based UBS Financial Services, didn't respond to a request for comment.
Fund managers including Capital Group Cos., owner of the American Funds, and Fidelity Investments reacted to the shift by lowering and waiving commissions or creating share classes without the charges. American Funds, which has never allowed the public to make direct purchases, now levies a full upfront commission on less than 5% of sales, said Chuck Freadhoff, a spokesman for the Los Angeles-based company.
'Open Architecture'
"There has been a very significant move to open architecture," said Robert Pozen, chairman emeritus at Boston's Massachusetts Financial Services Co. and a Bloomberg contributing editor.
With brokers less reliant on commissions, performance and cost became more important in determining what funds were sold. That created opportunities for firms with good track records that had refused to charge commissions and relied on direct sales to individual investors. No-load fund families such as Vanguard and Baltimore's T. Rowe Price Inc. were well-positioned for the shift.
"We had no opportunity to play in 70% of the retail market in the U.S.," Edward Bernard, vice chairman at T. Rowe Price, said in an interview. "All of a sudden we were totally compatible, not just in pricing but with our proposition of providing consistent performance."
Passing Fidelity
Vanguard's mutual-fund assets rose to $1.45 trillion at the end of 2010 from $564 billion in 2000. The firm passed Fidelity last year to become the biggest mutual-fund manager.