Advisor Group announced that, effective August 1, clients would no longer pay mutual fund fees associated with exchanges, systematic transactions, account inactivity and low balances. Other fees involving mutual fund-only IRAs also were reduced.
The firm sought other improvements to its fund business, enhancing its "no transaction fee" offerings, and reducing minimum mutual fund purchase size, required holding periods and early redemption charges. The number of mutual funds currently available to advisors now exceeds 4,500 mutual funds, the firm said.
Advisor Group's move comes at a time when the mutual fund industry itself is facing enormous pressure amid more than $400 billion in outflows over the past five years, according to the Investment Company Institute, a fund-industry trade group. And with investors fleeing mutual funds-especially equity-only funds-in favor of exchange-traded funds, which often have lower fees, that pain has become more acute and is now being passed down to the broker-dealers.
New York-based Advisor Group-an umbrella organization for three broker-dealers, FSC Securities Corp., Royal Alliance Associates and SagePoint Financial-employs more than 4,800 independent financial advisors. In July, the firm announced its parent company, SunAmerica Financial Group, would buy Woodbury Financial Services, adding an additional 1,400 advisors. This transaction is expected to close by the end of the year.
"These new fee adjustments give our advisors the ability to operate competitively in a marketplace that is increasingly sensitive to operational fees and also make maintaining a brokerage account even more cost effective for clients," said Advisor Group's Executive Vice President, Strategy & Advisor Experience, Matthew Schlueter, in a statement.