For some time, your bank or credit union has likely been urging you to change your business from transactional to fee-based. In fact, many of you are in that process or have completed the mission. Those who have resisted this change have a variety of reasons supporting their status quo position. However, at this point, conversion appears to be almost mandatory. Fortunately, the path to change might be easier than ever.

So why does your business remain stuck in a transactional format. Many would say, 'It's the way I have always done things. My clients like it and so do I so why mess up a good thing?' Others love the instant gratification of completing a transaction, seeing it on the next day's run, and getting paid that month. But here is the biggest concern most holdouts harbor: 'If I convert to fee-based, my income will drop for an extended period of time." Please understand that it doesn't have to be that way.

Most of you have a substantial portion of client assets, and thus your revenue, associated with retirement accounts. Certainly you have heard about the Department of Labor's new fiduciary rule.  This rule will have a major impact on our business. Research firm Cerulli Associates says that "firms will avoid IRA solutions if the advice provided receives compensation that the DOL considers potentially influenced by conflict of interest such as commissions and revenue sharing." Bing Waldert, a director at Cerulli, said in a statement, that broker-dealers with large advisory forces were adapting their business away from commission and proprietary products to fee-based fiduciary models business. So what does all this mean now and moving forward for your retirement accounts?



Average and median AUM and compensation for bank advisors. Source: Bank Investment Consultant research

Will advisors be required to charge fees rather than commissions for all their retirement accounts? There is an alternative, albeit cumbersome, called the Best Interest Contract (BIC) exemption. The BIC would be required for all non-fee based retirement accounts. This is a contract between retirement investors, advisors and their firms. It must contain the following: An acknowledgement of fiduciary duty to the investor; a disclosure of all compensation and fees; a warranty that neither the advisor or firm will make any misleading statements about fees, assets, or conflicts of interest; and that steps that will be taken by advisors and firms to mitigate potential conflicts of interest. Frankly, the only people likely to be comfortable with the BIC are the DoL and plaintiff attorneys.

The pending DoL fiduciary rule offers an excellent reason to begin to convert your book now. Pundits believe it will pass this year and be enacted in 2017. So you have good reason to reach out to all of your retirement account holders and begin the conversion process. You can simply tell clients that the new DoL ruling and your firm are the catalyst for change. Consider the profound impact it will have on your client relationships.

Most of the rhetoric you have heard over the years about fee-based relationships is actually true. Because you are charging an annual fee and not selling a product, clients tend to be less defensive and more trusting. This leads to deeper client relationships, access to more of their assets, and a greater possibility of referrals. What previously were best described as customers through conversion become "real clients." As you convert, your client's view of you transcends from salesperson to trusted advisor. In that sense, clients very much prefer fees over commissions.

So client prefer fees, the DOL is pushing that way and your firm will soon be on board. That said, you need a conversion strategy. Consider an $80 million book that generates $500,000 and currently has zero fee-based business. If a third of the book is retirement assets and those assets are converted to fee-based at on average charge of 1%, then that book would generate $20,000 in monthly fees. That equals roughly half its current monthly average. That sounds great, but how do you get there?

Identify a small group of fee-based products and services that are best-of-breed and will provide smart solutions for most all your clients. Become an expert on these offerings. By sticking to this core group, your expertise and confidence will shine through. Then make a commitment to meet, in person, with all of your retirement account holders between now and year-end. Let them know that the government is changing the rules of engagement for their retirement assets and present your winning solution. It is going to be a lot of work, but I doubt that many investors will resist. With this plan in place, your business conversion is off and running.

Once you get comfortable with the process and those monthly fees continue to expand, you will likely find yourself offering fee-based solutions to all types of accounts. As your fees grow, so grows the stability of your business. Clients are more positively engaged and your relationships deepen. The quality and value of your business will soar.

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Bill Willis is founder and president of Willis Consulting, a financial services recruiting firm. To learn more about his firm, visit willis-consulting.com.