"This will change the product mix and the kind of interaction we have with clients, to generate more of a fee income stream," said Dave Hanson, the chairman and chief executive of Fulton Financial Advisors.
His unit has not said when it would make the fee-based offerings available, but they would be offered alongside its commission-based offerings.
Fulton Financial Corp., which has 11 banks in five states, is joining a growing trend in which banking companies that have charged sales commissions for investments are offering fee-based advisory services as well. Clients typically pay about 1% of assets under management each year in return for advice, portfolio rebalancing, and other services.
Fulton's brokerage business, which has about $1 billion of assets under management, "has traditionally been more transaction oriented," Hanson said. Part of the reason his company is getting into the fee-based retail advisory service business is a gradual decrease in the referrals that have fueled commission-based lines, he said.
The drying up of brokerage referrals is an industry-wide phenomenon, he said.
"The low-hanging fruit has been picked," Hanson said. "The larger banks that got deeply into the brokerage business earlier on generally went to the fee-based approach earlier. Some of us got into the game a little bit later, so we're just a few years behind in that life cycle."
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