It’s about more than payouts

When looking for a new broker-dealer, many advisers start with the basics. Payout and cost of doing business are usually at the top of the list of due-diligence questions advisers use to determine if a firm is a good fit.

But the independent broker-dealer landscape offers so much more than it used to. For many IBDs, it’s no longer just about being a service provider; it’s about being a true partner with the advisers they work with.

For advisers focusing on compensation, this may eliminate potential firms from consideration.

Here’s another way to look at it. Take Linda. She is a $500,000 a year producer who receives a 90% payout. Linda is being courted by an IBD offering her a bump in payout, to 92%. The additional $10,000 a year sounds appealing.

Instead of focusing on the higher payout, however, she can look at firms that are fully committed to helping her grow. These extra services are not offered at most IBDs, as they are costly to implement and maintain.

But they give Linda the ability to do many things she may not have been able to do on her own, providing her the opportunity to significantly expand her practice.

ADDED SERVICES

Some of the most attractive and beneficial added services that select broker-dealers are offering include:

Business consulting. One of the challenges I hear from independent advisers is the challenge of balancing functions related to client portfolio management with decisions involved in running a business.

For advisers looking to maximize their net revenue by identifying chances to reduce costs, there are broker-dealers that dedicate a significant amount of resources to experts who can help advisers run a more streamlined practice.

Available resources that help advisers maximize their profitability include analysis of everything they spend money on to run their business. Suggestions from someone who focuses solely on driving profitability can make a major difference in advisers’ take-home income.

Turnkey marketing assistance. Advisers looking to expand their business can easily feel overwhelmed by all the things they need to do to accomplish their goals.

Aligning with an IBD that works in conjunction with an adviser on these efforts can make a significant impact on the growth of a practice.

Developing a branding message and marketing strategy that establish credibility and increase business may include everything from creating a dynamic website and focusing on social media exposure to continually communicating with clients via weekly or monthly commentary.

All these advantages and more are available to advisers with the right IBD partnership.

Education. Various IBDs are investing in their advisers’ education and offering them the ability to obtain various designations and to learn from experts in subjects such as retirement planning and practice management.

These types of programs are a tremendous resource for advisers. They have been tested and have proved to be successful in increasing production.

One IBD we work with reported a 19% increase in revenue growth for advisers participating in their programs in comparison to advisers who didn’t participate.

COMPARING NUMBERS

For Linda, the growth-oriented programs that some IBDs offer could make a significant difference to her bottom line.

If she increases her practice by that reported 19%, she will boost her revenue by $95,000 in the first year alone, in contrast to the $10,000 bump from a higher payout.

The independent broker-dealer landscape has become increasingly competitive. The benefits of this competition in the marketplace have created tremendous opportunities for advisers.

Some IBDs have enhanced their offerings not just to increase organic growth among their existing field force but to be more appealing to new advisers.

Long gone are the days when advisers had only their own re-sources to rely on for growth.

Rather than partnering with an IBD merely for the benefit of giving it less of the pie, it may make better sense to partner with a firm that helps you create a bigger pie.

Jodie Papike is the executive vice president of Cross-Search, a third- party, independent broker-dealer recruiting firm.