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Understanding the Unique Advantages of Cutter & Company’s Payout Structure for Independent Financial

Understanding the Unique Advantages of Cutter & Company’s Payout Structure for Independent Financial

July 21, 2023

As financial advisors consider their options and potential moves due to changes implemented by their current firms, compensation remains a crucial topic of interest. For example consulting firm Cerulli Associates conducted a survey that found 62% of wirehouse brokers believe their compensation plans have become too complex, as was reported in Cerulli also found that changes to wirehouse compensation plans, especially when they frequently occur,  may be beneficial for the firm but not necessarily for the advisor.

The same cannot be said about the payout schedule at Cutter & Company, an independent Broker-dealer and Registered Investment Advisor, which offers a distinct approach to compensation for independent financial advisors. Cutter & Company has maintained consistent payouts for more than 30 years while implementing beneficial adjustments along the way. In this article, we will explore key advantages that Cutter & Company provides to financial advisors contemplating their own independent business.

Stability and Enhancements in Payouts

One of the significant advantages of choosing Cutter & Company is an unwavering commitment to payout stability. Over the past 30 years, the firm has only made positive adjustments to their compensation grid, primarily by adding higher payout levels at lower production thresholds. For example, the firm introduced an additional 2% payout for $500,000 to $750,000 in production, bringing it to 87% (from the previous 85%). Similarly, the firm increased the payout by 1% (to 88%) for production of $750,001-$1,000,000.

Fair Treatment of Small Accounts

Cutter & Company understands the value of every client relationship, regardless of the account size. Unlike some firms, Cutter & Company does not penalize advisors by reducing payouts for managing small accounts. This policy ensures that advisors can provide comprehensive and unbiased advice, fostering trust and long-term client relationships.

Consistent Payouts Across Products and Services

Conflicted incentives can hinder an advisor’s ability to act in the best interests of their clients. Cutter & Company addresses this concern by offering the same payout percentage across all products and services. By eliminating incentives to push specific products or account types, advisors can focus solely on providing tailored solutions that meet their client’s needs.

Transparency in Fees

In contrast to many independent firms, Cutter & Company does not charge "affiliation fees" or add separate charges for outside business activities. Additionally, Cutter & Company does not pass through costs like SIPC and FINRA firm membership fees. This commitment to transparency ensures independent advisors can operate their businesses without unexpected or hidden costs.

Long-Term Technology Fee Stability

Cutter & Company values the importance of technology in supporting advisor practices. The firm has maintained the same technology fees for its clearinghouse for more than 20 years. By providing consistent technology costs, Cutter & Company allows advisors to effectively manage their operations without the burden of rapidly increasing expenses.

Passing on Reduced Clearing Charges

In 2016 and 2020, Cutter & Company was able to negotiate reduced clearinghouse charges. As a testament to their dedication to their advisors' success, the firm shared some of these reduced rates with its independent reps. This proactive approach demonstrates Cutter & Company's commitment to supporting their advisors and passing on cost savings whenever possible.

Cutter & Company offers financial advisors a unique value proposition with an unwavering commitment to stable and competitive payouts, fair treatment of small accounts, consistent payouts across products and services, transparent fee structures, long-term technology fee stability, and a track record of passing on cost savings. As advisors consider their options and seek a partner that aligns with their values and goals, Cutter & Company stands out as a trusted and supportive independent partner that fosters advisor success and client satisfaction.