Most advisers prefer working for a national firm

Seven in 10 financial advisers prefer working for a nationally recognized company over an independent advisory firm, according to a yet-to-be-released survey.
NOV 02, 2008
Seven in 10 financial advisers prefer working for a nationally recognized company over an independent advisory firm, according to a yet-to-be-released survey. "Financial representatives are looking for a brand name that stands behind them," said Brian Heapps, executive vice president of sales and development at John Hancock Financial Network Inc., which conducted the survey using a questionnaire developed by Mathew Greenwald & Associates Inc. of Washington. "I think if we put that same survey out today, it would still be a majority." The survey by the retail-distribution arm of Boston-based John Hancock Financial Services Inc,.drew responses from 1,016 of 55,260 advisers contacted. While the survey was conducted in the spring before the latest Wall Street turmoil, Hancock, a unit of Toronto-based Manulife Financial Corp., remains convinced that a majority of advisers throughout the nation prefer working for a national firm.

MAJOR ATTRACTIONS

Among the major attractions of working at such a firm, the survey found, are employee benefits such as health care, along with having access to services broker-dealers provide — such as an established information technology platform. Sixty-nine percent of respondents indicated a preference for access to subsidized health care. Many advisers in the survey indicated a preference for offerings -normally associated with an independent broker-dealer. For example, 88% said that they preferred selling from an open-architecture product platform, compared with 125 who preferred a proprietary platform that imposes sales quotas for certain products considered profitable to the company. Some of the infrastructure advantages that a national firm offers an adviser are a robust technology platform, marketing support, client communication tools and sales support, said Rita Cheng, a financial planner in the Bethesda, Md., office of Ameriprise Financial Services Inc. Having a name that is nationally recognizable is also a huge advantage when it comes to marketing to potential clients, she said. "There is more muscle behind the brand," said Ms. Cheng in explaining why she prefers working for a national firm. She declined to disclose her office's assets under management. Minneapolis-based Ameriprise has about $30 billion in assets under management. Many advisers opt to be affiliated with a broker-dealer to have a reliable technology platform at their fingertips, said Jeff Thomas, a branch manager in Dallas for St. Petersburg, Fla.-based Raymond James Financial Services Inc. "Having that [technology platform] being generated from [Raymond James] is certainly a huge strength," said Mr. Thomas, whose office has about $160 million in assets under management. "The technology platform ... allows me to work anywhere, anytime," said Matt Sliwa, a partner with KSP Financial Consultants, which is affiliated with the Waltham, Mass.-based broker-dealer Commonwealth Financial Network. "We find it to be one of the things that allow us to provide better service." Waltham-based KSP has about $260 million in assets under management, and Commonwealth manages about $50 billion.

NOT SOLD ON B-DS

Despite the survey's findings, many planners who work at fee-only firms prefer that environment far more than being affiliated with a broker-dealer and selling securities products. "[Advisers who work at national firms] don't really have to run a business; they just have to sell," said Rebecca Preston, who founded her practice, Preston Financial Planning in Providence, R.I., in 1999. "That's what I don't like to do." Marc B. Schindler, a veteran of national brokerage firms such as New York-based Lehman Brothers Holdings Inc. and Minneapolis-based RBC Dain Rauscher Inc., was prompted to help found Pivot Point Advisors LLC, a Bellaire, Texas-based fee-only firm, by his aversion to the focus on selling securities products. "I would rather not do business than do something I would not do on my own account," said Mr. Schindler, whose firm has $30 billion in assets under management. "That's one of the reasons I got away from their business model." Hancock decided to conduct the adviser survey in order to examine what changes should be made to its business model, according to Mr. Heapps. He didn't give specifics on what changes are being considered but said that an announcement could come this month. E-mail Andrew Coen at [email protected].

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