Changing broker dealers is a major decision for any advisor. Finding the right fit for your practice is like putting together a 500 piece puzzle as a multitude of factors need to be explored before a decision is made. We understand the importance of the right fit between an advisor and the Independent broker dealer they choose to partner with because we have seen the difference that partnership can make. And although doing due diligence on broker dealers can be a time consuming process, we feel it’s as pertinent as any other business decision and deserves time and attention. While advisors typically know to investigate the more obvious broker dealer characteristics such as payout, product availability and technology, the independent broker dealer landscape has changed. Those standard questions are no longer enough. The following are just a few of the lesser explored broker dealer characteristics that we continuously monitor to help determine which broker dealers will be a good fit for the advisors we work with.
- Who holds the power? It’s very important to understand who makes decisions at the firm you may be considering and how those decisions may affect you. For example, if you are interested in moving to a firm with a large parent company, it’s important to understand how that relationship affects the broker dealer. Does the parent company have long-term plans that will result in changes for the broker dealer, or do they plan to keep things status quo?
- What does their regulator history reveal? At Cross-Search we continuously look into the records of broker dealers and have insight into regulatory history and any pending liability a firm may have. These types of issues are invaluable for advisors to know about and are often times difficult for advisors to discover on their own.
- Deep pockets? No advisor wants to experience what it’s like to be with a broker dealer that goes out of business. The ripple effect is massive. Yet assessing the financial soundness of a broker dealer can be challenging. This is another area we continuously explore to ensure an advisor makes a properly informed decision before they move.
- Compliance tone. Culture is the semi-intangible component of an Independent broker dealer that, in our opinion, is one of the most important factors to consider when looking at firms. And there is no doubt that the culture within a compliance department can set the tone for your experience with a firm. Yet assessing the style of a compliance department is difficult. This is where our feedback from advisors we have placed at various independent broker dealers comes into play. Insight from advisors that are working with broker dealers gives us an invaluable look into how advisors are really treated at various firms. We use this insight to help guide us to Independent broker dealers that we feel do a great job for the advisors they work with.
We are big believers in the benefits a strong, long term broker dealer partnership can have on an advisors practice. Those partnerships do exist and we see them every day. We also know that changing broker dealers is a decision that requires a lot of due diligence as the broker dealer landscape is diverse and ever changing. We take pride our ability to make that due diligence process easier and for our process that facilitates the pieces coming together.