(Bloomberg News)
(Bloomberg News)

Ameriprise sees the Department of Labor's fiduciary rule as a potential boon to its business, should smaller competitors struggle to meet the expense of the regulation's implementation.

Small brokerages lack the infrastructure and preparation to comply with the fiduciary rule, which may lead to consolidation in the industry, Ameriprise CEO Jim Carrachiolo said during an earnings on call on Thursday.

Ameriprise reported net revenues were down 2% for the firm's wealth management business in Q1.

Carrachiolo also expects financial planners will likely join bigger, more establish broker-dealer platforms like Ameriprise. Other industry leaders share his outlook. Earlier this month, Raymond James CEO Paul Reilly said small independent advisors, who lack scale and resources, may look to join forces with larger firms.

Read more: Fiduciary Rule May Spur New Industry Consolidation

"Major fee-based platforms will benefit from the rule," recruiter Michael King, president of Michael King Associates, says. "Small broker-dealers who do not have a fee based platform will join larger platforms because of the rule. Ameriprise, having a large independent platform, will benefit from the rule."

Independent adviser headcount at Ameriprise was 7,720, up 113 from the year ago period, while the employee channel had 2,046 advisers, 38 less for the same period.


The rule "will squeeze others in the industry," Carrachiolo says. He noted Ameriprise was well positioned to ensure compliance and implementation of the rule across the firm.

New technology and training efforts are already underway, devoted to support the rule's implementation, according to Ameriprise.

A head start on the efforts has helped lower the cost of such expenses. Costs will be spread over the next two years, more so in the next three quarters, more than what will be paid out next year, the firm said.

"The full impact of the fiduciary rule, however, is too soon to tell," another industry watcher, recruiter Danny Sarch, president of Leitner Sarch Consultants, says.

"The (fiduciary) document is very long and every advisor's practice is unique," Sarch adds. "I don't think there is enough time to absorb the impact of it especially when there are so many variables based on the Best Interest Contract Exemption."

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