His advice? Transition to an outright fee-based account soon. “It’s always a difficult discussion to have with clients around fees,” Anderson said. “For all they know, they’re not paying anything and now the advisor has to say, ‘I’m moving you to an annual 1% fee.’ That is where advisors have to get better at [explaining] their value proposition.”

The SEC report advises: “Continue to evolve from being a product salesperson to your clients’ wealth manager. Assess your fee structure. Think carefully about all of the ways you have been and are paid by clients.”

Beyond regulatory pressure, the fast-evolving market for advice will also force independent advisors—particularly those with $100 million to $750 million under management—to evolve, Anderson said. He described the industry a decade hence as being dominated by large digital providers like Schwab and Vanguard and mega-advisors with billions in assets.

“This will squeeze independent advisors in the middle and force them to either join a large firm or lower fees,” he said. “Think beyond the four walls of your office and use technology to compete virtually, nationally.”

He also predicts that the large RIA firms produced by roll-ups will begin to flex their lobbying muscle to steer regulation, much as the Financial Services Institute, SIFMA, larger wirehouses, banks and insurers do today. “Ever-larger RIAs are still in the acquisition stage right now, but I see them having a powerful voice when it comes to regulation and legislation,” Anderson said.

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