Cambridge Will Keep Supporting Commission-Based Retirement Accounts

While a handful of firms are moving away from commission-based retirement accounts in light of the DOL’s fiduciary rule, Cambridge Investment Group says it will keep supporting these accounts as it develops its own fiduciary strategy for its advisers.

Cambridge Investment Group announced it will keep supporting fee-based and commission-based retirement accounts for its independent financial advisers and their clients.

The independent broker/dealer says it’s in the final stages of constructing the processes and tools designed to help its advisers implement their own fiduciary capacity based on their clients’ needs, book of business, and the business model they have chosen for their independent firms. Cambridge says it will continue supporting these initiatives in order to offer advisers flexibility, while also complying with the changing regulatory space.    

“We think every firm should have a unique value proposition while serving the best interests of the investing clients,” says Cambridge Investment President Amy Webber. “Serving the needs of the client must clearly be the highest priority, along with observing regulatory requirements, but after that, decisions regarding fee-based or commission-based retirement accounts are more about the business approach and culture that defines every firm, whether it’s a broker-dealer, RIA [Registered Investment Adviser], or a firm owned by an independent financial professional.”

Cambridge intends to apply the DOL’s Best Interest Contract (BIC) provision to certain commission-based accounts, while discretionary advisory business will be supported through level-fee platforms. While commission-based retirement accounts will be acceptable at Cambridge, the commissions must be levelized by each predefined investment category so that all similar investment options have the same compensation structure.

“Cambridge has long been a leader in fee-based accounts, but we believe the investing client and their trusted financial adviser must have access to appropriate choices they can consider for their unique retirement needs,” says Webber. “With choice and compliance in mind, we’ve identified four business paths our advisers can choose from as we work together to forge the best path forward.”

Cambridge identified these four business paths as non-retirement investing client, small accounts, Best Interest Contract, and level-fee fiduciary. Cambridge’s Fiduciary Services team is creating Advisor Fiduciary Plans to offer each adviser insight into the accounts effected by the new DOL rule, as well as outlining the steps the adviser needs to take to comply with the new DOL rule.

The Conflict of Interest rule often dubbed as the DOL Fiduciary Rule has an applicability deadline of April 10, 2017, and a full implementation deadline of January 1, 2018.

Cambridge Investment Group’s move stands in contrast to other broker/dealers including Merrill Lynch and Commonwealth Financial Network, which will cease offering commission-based products in individual retirement accounts (IRAs), and all retirement accounts, respectively.