FSI to hike fees dramatically

At least one disgruntled broker-dealer executive said he learned last week that his fees would increase 50% next year, and that his annual membership would cost around $30,000.

FSI spokesman Chris Paulitz confirmed that the fee increase will be applied on a sliding scale with larger firms paying higher dues.

The FSI board of directors “finalized the increases a couple of weeks ago at a board meeting and last week we sent out our first round of notices explaining the vision of how we got to this to all our CEO members,” Mr. Paulitz said.

During an FSI-hosted conference call yesterday, that included more than 60 executives from member firms, Mr. Paulitz noted “the remarkable thing, we opened it up for comments and there was not one negative statement on this dues issue.”

“The response we’re getting is overwhelmingly positive,” he added.

Wayne Bloom, chief executive of Commonwealth Financial Network, was on the FSI call and posted his support on Twitter yesterday morning.

“The increase isn’t insignificant, but to put forth the number of advocacy issues [the FSI] has on its plate, they need to increase their budget,” Mr. Bloom said in an interview.

He noted that the firm fit in the $500 million to $1 billion slot, so its fees would rise from $14,000 this year to $57,000 in 2015, according to FSI’s scale.

“It would be penny wise and pound foolish not to support the efforts FSI puts forth,” Mr. Bloom added.
The executive, who asked not to be quoted or identified, said he does not support the FSI’s increasing dues in order to move beyond its core competency into areas such as tax policy lobbying.

The executive added that he plans to fight the dues increase and will consider not renewing his membership over the issue.

Mari Buechner, president and chief executive of Coordinated Capital Securities Inc. is one of the FSI board members that unanimously supported the dues increase.

While she said it will more than double her firm’s annual membership dues, Ms. Buechner said “you have to look at it from the perspective that FSI can do more than I could do as a small firm.”

In making the case for the fee hike, which Ms. Buechner said the board had spent more than two years evaluating, she added, “FSI has had some great victories with very limited resources, and even though we’re in difficult times, the time is now to continue to invest and continue the momentum.”

According to an FSI document, membership dues will start increasing next year and then be bumped up again in 2014.

The idea of much higher dues did not phase board member Tim Murphy, chief executive of Investors Capital Corp.

“The fees we’re paying to the FSI pale in comparison to any other fees we’re paying for other services,” he said. “In my opinion, it’s an insignificant number because this is the time when we need to be moving forward.”

Mr. Murphy refused to say exactly how much more his firm would be paying in annual dues.

“The FSI has had a lot of victories, and relatively speaking, it has always been a bargain,” he said. “Management and the board are sensitive to the current economic conditions, but most of the fee increase will be borne by the larger firms.”

Dues are pegged to firm revenues and currently range from $1,000 to $20,000.

Under the new formula, next year’s dues will range from $1,500 for a firm with less than $5 million in annual revenue to $100,000 for a firm with more than $2 billion in revenue.

In 2014, the dues will range from $2,000 to $175,000.

Some firms will start paying the higher dues next month, Mr. Paulitz said.

The FSI has 124 broker-dealer member firms and represents more than 30,000 individual financial advisers.
Mr. Paulitz said part of the additional revenues will go toward adding staff to the advocacy and membership teams.

“We’re looking to double our advocacy team to about eight people,” he said.

Related Topics: Financial Services Institute Inc. (FSI), Trade Organizations