What's new in today's move to independence

Jul 10, 2018 @ 12:01 am

The following is a new white paper produced by Sigma Financial Corporation & Parkland Securities, LLC and the InvestmentNews Content Strategy Studio, “How to Determine if a Broker-Dealer is Right for You: Six questions advisors must ask about the independent model”:

Traditionally, the main drivers of advisors' moves to affiliate with an independent broker-dealer have been the promise of greater compensation and the freedom to do business in ways that best suit their clients.

Those drivers still apply, but advisors have come to realize that independence now can be the route to achieving personal and business goals that were set aside to meet the demands of employers or their current broker-dealer.

Today, advisors have the opportunity to select a broker-dealer who best matches and supports their personality, skills, business niche and operating style, as well as their specific support requirements in the areas of technology, service and compliance. The key, of course, is for advisors to identify clearly what they are seeking and to be able to assess whether a broker-dealer they are considering truly meets their needs.

This white paper is intended to help advisors crystalize their thinking and improve decision-making when grappling with questions regarding independence and the firm with which to affiliate.

It includes an issue-by-issue rundown of the support factors advisors should consider when evaluating a broker-dealer.

It also includes six questions advisors must ask themselves before making a move. These questions are based on the experiences of a senior broker-dealer executive who has helped scores of advisors make the transition to independence, as well as move from one independent broker-dealer to another.

Broker-Dealer Support Factors to Consider: Support for your business objectives

Some advisors choose independence so they can maintain their business the way it is, without any external pressure to grow or change. Other advisors seek independence so they can expand their business aggressively, increasing its long-term value and their current income. Others may have different business goals, such as wishing to pursue a market niche that their current broker-dealer environment doesn't readily support, or even winding down their business as they approach retirement.

Whatever their business objective, advisors looking for a new, independent affiliation should consider how well a prospective broker-dealer will be able to help an advisor achieve his or her goals. Levels of support, as well as tools and product offerings, vary among broker-dealers.

While many firms ostensibly may offer everything an advisor wishes or needs, the thoroughness of their offerings and their expertise may not match their claims. This is particularly the case in the area of marketing, technology and practice management support.

To help determine whether a firm can deliver on its promises in the area of business-building, advisors should ask to speak with current affiliated advisors whose businesses and are similar to their own. If growth is on the agenda, advisors also should inquire about the extent to which a broker-dealer supports or encourages the recruitment of brokers to work with its affiliated advisors.

Also inquire about whether the broker-dealer encourages or facilitates the acquisition of practices or blocks of business among its affiliates. For example, some firms support the growth of younger advisors' businesses by helping to arrange transitions with older advisors who have developed exit and retirement plans. Others encourage or facilitate other kinds of deals, which may include financing arrangements.


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