FiNet's wirehouse-lite model scores with advisors

Lisa Shidler | RIAbiz, May 2011

Summary: Wells Fargo vertically integrated to offer both a wirehouse option and an IBD option, FiNet. This option attributes to their success in attracting other wirehouse reps to their FINet IBD. FiNet saw a 21% increase in the number of advisors over the past year. The advisors get a higher payout than a wirehouse (72% to 77%) and are no longer an employee, they are independent and absorb the bricks and mortar business risk.

The biggest difference between the two channels is the FiNet advisors are choosing their location and staff and operate as independent contractors. Wells Fargo’s advisors are paid employees.”

John Peluso, FiNet's president

Our Commentary

While FiNet is less corporate than a wirehouse, it is still more restrictive and controlling than other IBDs much less other hybrid RIAs. Additionally, the 72-77% is far away from the 85-92% payouts of other IBDs. If the advisor feels there is value here than that is fine: evaluate the cost benefit.

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