Indies’ gut check: Is my B-D a fit?

All broker-dealers are looking for high-quality, growth-oriented, compliant advisers to add assets and horsepower to their firms. This…

All broker-dealers are looking for high-quality, growth-oriented, compliant advisers to add assets and horsepower to their firms. This gives top independent advisers leverage with their B-Ds and the right to expect more support from them.

Still, advisers need to ask themselves two questions each and every year: “Could I see myself with my current broker-dealer five or 10 years from now?” and, “If I had to start from scratch today, would my due diligence still point me to my current B-D, given the options across the landscape?”

The answers to these questions will help advisers determine if they are with the right B-D — one that supports their business and goals, or conversely, if it’s time to compare and contrast a few competing firms to find out if a change would be beneficial. The following are some thoughts to help guide your thinking:

1. Assess your frustration level. Analyze the challenges you face on a daily basis, and quantify their impact on your business.

2. List the things that you wish your B-D would do to support you and help you grow faster. Be honest and fearless.

3. Express your frustrations to the powers that be, and give your B-D the opportunity to remediate these challenges.

4. Establish whether your B-D has the resources to help you learn your craft. Are there peers and/or mentors from which to learn?

5. Remember the old Ben Franklin-type analysis — would the potential “value-adds” of a move outweigh the hassle of doing so?

Some advisers have been pleasantly surprised by what the due-diligence process has revealed. Take the example of Matt, the principal of one of the top offices of supervisory jurisdiction within his broker-dealer’s network. Matt has been an adviser for more than 20 years and independent for the past 10, having started his career at Merrill Lynch & Co. Inc.

He has thrived as an independent and built a business with a staff of 12, assets under management of close to $750 million and annual revenue approaching $5 million. He personally oversees the firm’s top 100 client households and has four other advisers who help manage the balance.

Matt largely has been happy with his B-D over the years, growing 10%-15% annually, and has always been treated like royalty given his status within the firm. But in the past few years, he has been wondering if what “got him here will be enough to get him there.”

With his curiosity peaking, Matt took a call and a subsequent lunch meeting with a representative of a B-D who had called consistently over the years. That lunch opened Matt’s eyes to what possibilities exist, and he became willing to look at other options, as well.

Prior to this exploration, Matt had no idea about what he had been lacking from his current B-D until he began to compare its platform, capabilities, technology and resources specific to the high-net-worth set, to others’. He discovered firms that had definite advantages over his current one, and he began to feel that he could grow faster and provide clients better service by making a move. Additionally, he had offers of transition assistance ranging from 15% to 35% of trailing-12-month production. Matt is now completing the final steps in his due-diligence and is likely to change B-Ds by the end of the year.

To be most effective and efficient in doing due diligence, advisers need to create a list of “must haves” (deal breakers you wouldn’t move without) and a “wish list” (items that would be nice to have, but you would be flexible about).

At a minimum, all quality B-Ds should offer the following:

• Support for business growth: Help with recruiting, identifying acquisition possibilities, access to capital and expertise.

• Succession planning assistance.

• Practice management support.

• Operational support to maximize efficiency.

• A robust platform with access to planning, trust, insurance, lending and alternatives — one that will allow you to capture clients of all sizes.

• Best-in-class technology.

The key is to understand that a move almost always requires a series of give-ups in order to get the all-important gains of the best access, service and support possible.

If you aren’t sure that your B-D is the right one to support you today and for the long haul, know that you are entitled to much more — and it’s out there if you know where to look.

Mindy Diamond is president and chief executive of Diamond Consultants LLC.