B-Ds Can Help Build Advisory Biz

Independent firms now are offering more than just upfront recruiting packages

Broker-dealers are experiencing a slowdown in recruiting compared with the busy years of 2008 and 2009 when merger and acquisition activity was heavy and financial advisers were fleeing larger conglomerates.

With less turnover, training programs at wirehouses and captive agencies are now dormant and have been so for the past few years, resulting in a smaller pool of advisers at a medium level of experience. That leaves too few recruits to meet demand, a recent Pershing study found, with only about 6.9% of broker-dealer-affiliated professionals considering a change.

Established wirehouse advisers are often locked into retention agreements, resulting in fewer going independent.

According to the study, the average independent broker-dealer loses six investment professionals for every five it recruits, and many firms will never recover the training costs.

For some broker-dealers, the solution is a focus on organic growth. In today’s low-supply environment, independent broker-dealers are creating services to develop higher-producing advisers.

This is a huge change from years past when independent B-Ds didn’t have solid training programs in place for more junior advisers. As a result, less-experienced and experienced advisers alike who want to build their businesses can benefit significantly by exploring business-building services and programs offered by some independent broker-dealers.

Here are four areas where broker-dealers are investing to help their advisers grow and what types of services advisers considering a move can look for, above and beyond upfront packages:

Training: Broker-dealers are increasingly offering educational opportunities through workshops, seminars and conferences. Training sources vary from internal practice management departments to third-party education programs and trainings. Subject matter runs the gamut. At First Allied Securities Inc., for example, comprehensive wealth management training programs held at universities can culminate in a certified wealth strategist designation. Commonwealth Financial Network offers training programs for both experienced and newer advisers. “Junior advisers” are offered access to “senior advisers” as a supplement to office of supervisory jurisdiction support, as well as workshops and coaching.

Practice management: Broker-dealers are building their practice management departments, helping advisers to attract and retain clients. Many firms have practice management groups helping advisers identify their ideal client and position their practice to attract them through referral programs, seminars and other vehicles. At FSC Securities Corp, advisers, such as John Jastremski, have access to a program with The Retirement Group, an OSJ specializing in the 401(k) rollover marketplace that not only trains advisers to become experts in this area but also refers clients to them. Other firms now offer turnkey seminar programs that provide access to pre-qualified high-net-worth prospects and specialists to assist with logistics and implementation.

Business building/planning: Some B-Ds focus on helping advisers build business plans and career paths for themselves. In our experience, advisers with a clear vision of the future of their practice and a road map for how to get there are more apt to be successful. Succession planning is part of this process. Online tools offer templates for succession as well as general business planning to groom in-house advisers or target others as firm successors. Programs offer coaching, webinars and one-on-one interaction to help with operational efficiencies, risk management and production enhancement.

Marketing: We are also seeing broker-dealers add tools to market advisers’ businesses ranging from website building to newsletters and brochures, etc., and extending to branding to appeal to niches. Increasingly, advisers need only to enter their contact information to receive a full suite of materials.

We recommend looking closely at each firm’s offerings, asking questions of broker-dealers that claim to have strong business-building services, and talking to their advisers about their results. Some firms claim to offer comprehensive business-building services yet may not be sophisticated enough or have the support staff in place to be effective.

Partnering with a broker-dealer that has quality programs to meet your specific needs can add significant value in building your business and helping you realize your goals.