Avantax talks about changes for advisers as head count drops

A new compensation plan is among the changes the firm is preparing for advisers in 2022.

Blucora Inc. Thursday reported an 11% year-over-year decline in the number of financial advisers registered with its broker-dealer and registered investment adviser business, Avantax. But executives said the company was taking steps to turn such steep drops in adviser head count around by 2022.

The executives didn’t reveal exact details of the changes for its financial advisers during a conference call with analysts to discuss third-quarter earnings Thursday. But they did mention working on technology, a new compensation plan for advisers and an improved overall experience for advisers’ clients; that is all happening as Avantax continues working to build out its registered investment adviser business.

Last year, InvestmentNews reported that Avantax was in the process of levying a new $60 annual fee for advisers’ accounts at outside money managers, which are popular way for advisers to conduct business directly with mutual fund companies like American Funds. Called direct to fund, or DTF, by advisers, the method is a simple way for advisers to sell mutual funds to clients.

New fees always rankle financial advisers. But Blucora’s CEO, Christopher Walters, said during the conference call that should be smoothed over in 2022.

“Ultimately, that shift led some advisers who were more focused on DTF business to be less inclined or less happy with us in the near term,” Walters said. “There’s a variety of things that have happened, but we think that the actions that we’re taking will ultimately turn that tide over the course of the next year.”

As of September 30, Blucora’s wealth management business worked with 3,529 financial professionals, according to the company. That marks a decline of 446 from the head count of 3,975 financial professionals it had a year earlier.

The firm reported $86.6 billion in total client assets in wealth management at the end of September, an increase of 13.8% when compared to the same time last year.

Walters said over the summer that many advisers who have left the firm this year were low-producing advisers who generated less than $50,000 annually in fees and commissions.

Avantax has two sides to its business: its broker-dealer, Avantax Investment Services Inc., and its RIA, Avantax Planning Partners.