Minding your businesses: Broker Dealers step up their support for RIAs

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1 Minding your businesses: Broker Dealers step up their support for RIAs A SUPPLEMENT TO PRODUCED BY SOURCEMEDIA MARKETING SOLUTIONS GROUP

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4 For 45 years, SII has been creating efficiencies for our advisors and setting the standard for broker/dealer service. Our experienced management team continues to research and develop solutions to meet the changing needs of SII and its representatives, including the most up-to-date technology and product offerings. [ OUR REPRESENTATIVES ] Our advisors experience true independence without feeling left behind. We seek and incorporate suggestions from our representatives into our systems and processes, allowing us to provide the most practical solutions for the unique needs of each practice. [ PARTNERSHIP ] We take great pride in the culture of our organization and the long-term partnerships we have built with our representatives. Join us in celebrating a refreshing alternative in broker/dealer accountability and find the personalized service you deserve WIN W SII [ ] recruiting@siionline.com

5 Publisher s Letter Dear Reader, The role of advisors is changing constantly. Gone are the days when successful portfolio management for your clients meant you were running a successful advisory practice. You now need to think of your business as just that a business and see that it is run accordingly. Much easier said than done, especially given the many hats advisors wear on a daily basis. Your broker-dealer is one place to turn for support. This year, in Financial Planning s 16 th Annual Broker-Dealer Guide, we ll highlight what some of the leading firms are doing to help advisors juggle these new responsibilities and give you the resources you need to position your practice for growth in the future. Whether it s making investments in technology, hiring additional support personnel with specific expertise or offering new tools and training, clearly the most prominent broker-dealers recognize that if they re not continually adding value to your relationship then you ll find someone who will. When it comes to having the right strategic partners, size definitely matters. Thankfully, size is not synonymous with service with regards to brokerdealers and the best fit is never the same for every advisor. The range of firms, from industry giant to small boutique and everything in between, allows advisors to find the partner most closely aligned with your needs. Thank you for being a loyal Financial Planning subscriber, and please let us know how we can continue to help further your success. All the best, Mike Schott Publisher Michael.Schott@SourceMedia.com 3 Broker-Dealer Guide / SourceMedia Marketing Solutions Group

6 25% can go a long way Where will it take you? Get up to 25% of your trailing-12 GDC upfront Great new office space? Great new technology? Great Barrier Reef? Whatever you decide to do with your 25% is a Great idea. Pay off debt, invest in your business, relax and recharge on the other side of the world and come back ready to tackle It s up to you. For qualified advisors, we offer a transition package of up to 25% when you join. We cover your registration costs and any account closing fees your clients may incur. So, 25% means 25%. Investors Capital Corporation is a premier independent broker/dealer offering you 5-Star Service every day. Since 1992, our mission has been to make you feel special and important while helping you achieve success personally and professionally. We are predominantly owned by our advisors, clients, and staff so, you experience real independence and firm ownership. Our warm home office culture is based on honesty, respect, and integrity for our advisors you ll enjoy your relationship with us. Get 5-Star Service sm and more every day Our entire home office staff annually attends The Ritz-Carlton Leadership Center to reinforce the principles of their legendary service. Our goal: you receive that same caliber of service. Every day. We offer proven practice management to help you grow. Our CapitalCONNECT technology will help you increase your efficiency. And our customizable advisory programs will help you attach value to your practice. Get 25% in 2013 and make this the year you get the resources you want along with the partner you need to truly grow. Where will joining Investors Capital take you? Hopefully, to places, personally and professionally, you ve always longed to go. Contact us today to see if you qualify.

7 Contents 3 Publisher s Letter 6 Dedicated Management: Broker-Dealers Arm Their Advisors with New Tools to Help Them Mind Their Businesses 14 Recruiting Today: In A Tight Marketplace, The Lures Come Out 19 Big vs. Small: Two Transitioning Advisors and Their Search for the Right Size in a Broker-Dealer 2013 Survey Data 28 Total Revenues 30 Payout Grids 33 Services & Fees 35 Clients & Accounts 36 Reps & Production 38 Commission-Based Products 40 Fee-Based Products 41 Corporate Staff 42 Smaller Firms 43 Networks 44 Top 10 Lists 45 Explanatory Notes 46 Resource Directory SENIOR PROJECT MANAGER Julia Micallef ART DIRECTOR Janette Leung PUBLISHER Mike Schott NORTHEAST SALES MANAGER Robin Riley MIDATLANTIC SALES MANAGER Jim Shannon MIDWEST SALES MANAGER Vicki Hamilton WEST REGION SALES MANAGER Gena Haas CLASSIFIED ADVERTISING MANAGER Sheila Sullivan-Alyskewyz ADVERTISING SALES ASSISTANT Betty Lai REPRINT SALES DIRECTOR Godfrey Livermore MARKETING MANAGER Susan Zeqiri CEO Douglas J. Manoni CFO Rebecca Knoop EVP & MANAGING DIRECTOR, BANKING & CAPITAL MARKETS Karl Elken EVP & MANAGING DIRECTOR, PROFESSIONAL SERVICES & TECHNOLOGY GROUPS Bruce Morris EVP & CHIEF CONTENT OFFICER David Longobardi EVP, MARKETING SOLUTIONS Adam Reinebach SVP, CONFERENCES John DelMauro SVP, HR & OFFICE MANAGEMENT Ying Wong 5 Broker-Dealer Guide / SourceMedia Marketing Solutions Group

8 DEDICATED MANAGEMENT: Broker-Dealers Arm Their Advisors with New Tools to Help Them Mind Their Businesses Financial advisors have expertise in financial planning. They know all about investments and how to deliver financial advice. They are sometimes so focused on helping clients with their investments and goals that they lose sight of the fact that financial planning is also a business and despite their many other skills, they don t necessarily know how to run a business. This where the concept of dedicated management comes into play. It is a subset of practice management and it is an area of fierce competition among broker-dealers to provide the best services to their affiliated RIAs. Dedicated management refers to a management position devoted to running the RIA business, says Rebecca Pomering, CEO of Moss Adams Wealth Advisors. For RIAs with the necessary scale, this could be a full time internal position. For smaller RIAs, help with this responsibility can be partially outsourced to their broker dealer who can provide the necessary training and support. Moss Adams, an accounting and business consulting firm, coined the phrase dedicated management in research reports as far back as Broker-Dealer Guide / SourceMedia Marketing Solutions Group 6

9 Broker dealers should consider customizing their relationships with RIAs depending on the management capabilities of each client. Rebecca Pomering CEO, Moss Adams Wealth Advisors Broker dealers should consider customizing their relationships with RIAs depending on the management capabilities of each client, Pomering adds. For instance, firms with a full time dedicated manager in place, such as Pomering s she is the CEO, not a glorified office manager still might require high levels of support from a b-d. For RIAs without a dedicated manager, who are running the business side of things largely in their spare time, the b-d will have to supply a more complete skill set. This could include compliance support; operations support; strategic planning support; and marketing support. Not every b-d uses the precise term dedicated management but all are familiar with the concept, and the importance of meeting their affiliated RIAs needs in this area. They certainly are upping the ante: B-Ds are arming their advisors with an amazing array of new tools related to the business side of financial planning. These include new technology, tactics, and resources. There is a reason for heavy investments by b-ds in this area. As Pomering points out, product offerings and advice are increasingly commoditized. Instead, professional management capabilities, supported or even supplied by a b-d, is what will distinguish a good vs. mediocre RIA firm in the future, she says. B-D OFFERINGS: Improved Training Broker dealers have upped their dedication to training to help RIAs with their own business management. Take the offering of Questar Capital, the broker-dealer for Allianz Life: We have implemented a lot of training, education, and motivation programs in the last 3 years, says Questar s President, Kevin Bachmann. Questar s primary offering is the AMP (Amplify your Practice) program. It consists of two sessions, each of which unfolds over two days. The first session is focused on growing the business; the second is more client-centric, and includes a compelling session devoted to the subtle art of how to get referrals without explicitly asking for referrals. Overarching topics include how to create branding messages, as well as how to develop and fill market niches. As one rep said of the program, which costs a nominal fee, It s an investment must for anyone serious about taking their business to the next level. Bachmann isn t surprised by this reaction: it s a common one from RIAs when it comes to this program. They value it, they love it, they stay with us, Bachmann says. Questar is now developing a graduate AMP, a, more intensive and extensive offering which will take the program itself to the next level. When it comes to business training of RIAs, Bachmann explains Questar Capital s philosophy: The advisors are taking care of their clients. My job as the broker-dealer is to take care of the reps and help them grow their practice and bring to them that value add. It s an investment must for anyone serious about taking their business to the next level. Kevin Bachmann President, Questar Technology Technology is the core of broker-dealer offerings and often what sets them apart. Technology focused on management, not just investment, is key to running an RIA business successfully. ING U.S., which plans to rebrand itself Voya Financial, is at the forefront of offerings in this area, through its broker dealer ING Financial Partners, (which similarly will be renamed). Karl Lindberg, ING Financial Partners President says, we have a whole host of tools we offer planners in this and other areas. These tools provide the advisor with a streamlined process, freeing up time that can be devoted to business development or other activities. Management tools are integrated with other planning tools, to provide a comprehensive experience for planners, as well as clients. Our approach is to find the right industry and planning tools for advisors, and integrate these into a common solution set, says Lindberg. The broker-dealer provided workstations help advisors run many facets of their businesses. For instance, a robust marketing program that gives them turnkey marketing campaigns is built into the platform. Alternatively, the platform can deal with personnel issues including administrative employee turnover; the technology makes it that much easier to transition an employee in or out. RIAs can leverage any discussions they have with clients about new investments or educational offerings, by using the platform s capabilities to send out automatic yet customized mailings. 7 Broker-Dealer Guide / SourceMedia Marketing Solutions Group

10 Voya s overall business is now heavily retirement-centric, focused on helping American s to plan and save to and through retirement. The broker-dealer arm shares this interest, and furthermore has unique partnerships with 401k plans. These give reps unusual access to large groups of employees. Reps can provide retirement readiness, education, and planning to a whole new population outside of the traditional financial planning channel. Says Karl Lindberg, this is a huge opportunity for us. Sponsors don t want you to cherry pick, they want to have a program of high end planning for everybody. The program Lindberg provides his advisors with allows them to do exactly that. It means they can spend more time with clients and less time on the back office. Mentoring AIG s Advisor Group provides all the latest offerings to let their advisors run and grow their businesses efficiently. For instance the company has a data portal that combines client information, back office technology, and social media capabilities, assuring that client outreach is customized. Advisor Group similarly offers business development, coaching and succession planning. But the company has an additional offering related to RIA business management that is perhaps unique: mentoring. The goal is to build a business model based on the demographics of America today. Larry Roth President and CEO, Advisor Group Larry Roth, President and CEO of Advisor Group, explains, the idea is that we, as an industry, need more advisors, younger advisors, women advisors. Mentoring is one solution for reaching this goal for Advisor Group, and for the industry on the whole. As Roth points out, there is dramatic misalignment between the average indy advisor, who is typically a male in his early fifties, and the general population, where more than 50% of the assets are now controlled by women. And when a husband dies, most surviving widows seek a new financial advisor, and often times they look for a female advisor. In general, people tend to be more comfortable working with an advisor who is like themselves. Advisor Group is building a comprehensive program to recruit more women to the industry and help female advisors grow their practices (called Generation i), incorporating mentoring as a way to overcome some of these disparities. The program includes scholarships, as well as internships at Sponsors want to have a program of high end planning for everybody. Karl Lindberg President, ING Financial Partners existing firms. Mentoring is key to helping women advisors grow their practices. Sometimes other women are the mentors, but men can be mentors too. The goal is to build a business model based on the demographics of America today, Roth says. Gender is the current focus of mentoring but other forums being explored include LGBT and ethnicity, with all programs spearheaded by Advisor Group in collaboration with advisors. The resulting business and advisor model will serve a larger part of the population than the current model. Says Roth, No one firm can fix the advisor demographic problem. We hope to someday deploy this at an industry-wide level. Advisor Group s Generation i and mentoring program could serve as the springboard towards building a larger and more inclusive advisor workforce. A Holistic Approach Each major broker dealer has its own offering related to supporting the business side of the business. The emphasis varies from technology to practice management to business development to compliance support. What sets Cetera Financial Group apart is its focus on these things as a whole. Call it holistic dedicated management. Allison Couch, National Sales Manager at Cetera Financial Group says, we look at the advisory business holistically. If you pick and choose what you support instead of supporting the entire business from communication to reporting, you leave gaps for the advisor to fill. She emphasizes this approach best delivers to the advisor the tools they need to run their businesses. As Couch points out, there are really four major areas that impact an RIA as a business: technology; compliance; efficiency; and succession planning. Cetera has solved for these complicated business issues by building out an institutional quality model management and trading platform. It is an open architecture platform, something most advisor representatives demand. Cetera s technology philosophy is to buy, not build, and to use best of class for each program and integrate with their SmartWorks advisor workstation. For those advisors that would rather focus on managing client relationships instead of managing portfolios, they provide a turn-key Mutual Fund/Exchange traded funds turn-key program that received the MMI advisory solution of the year award in Broker-Dealer Guide / SourceMedia Marketing Solutions Group 8

11 Consistency counts. J.D. Power and Associates ranks Commonwealth: Highest in Independent Advisor Satisfaction Among Financial Investment Firms, Three Times in a Row. The industry s leading advisors do whatever it takes to satisfy their clients and so do we. We re proud to be honored for delivering the kind of experience our advisors can rely on day in, day out. Contact us today to learn more about how we can make our consistency work for you. An Independent Broker/Dealer Registered Investment Adviser Established 1979 Member FINRA/SIPC commonwealth.com Commonwealth Financial Network received the highest numerical score in the independent advisor segment in the proprietary J.D. Power and Associates 2010, 2012, and 2013 Financial Advisor Satisfaction Studies SṂ 2013 study based on 2,547 total responses and measures overall financial advisor satisfaction among advisors registered with the Financial Industry Regulatory Authority (FINRA) investment firms. Proprietary study results are based on experiences and perceptions of financial advisors surveyed in October 2012 February Your experiences may vary. Visit jdpower.com.

12 Our focus in on helping advisors stay front and center with their client. Allison Couch National Sales Manager, Cetera Financial Couch explains how this platform and other programs provide support for the major business issues facing RIAs. Take compliance. Cetera has a dedicated Chief Compliance Officer for their wealth management business. Says Couch, regulation is getting more complex. It is critical that we build an RIA that provides flexibility and protects the advisor at the same time. We have three flexible financial planning options as well as a 321 plan sponsor program all that can be done under our corporate RIA. This holistic approach manifests itself in client communications too. It is clear that the greater the number of advisor touches, the more loyal the client. Less clear is how to implement these touches to create the best experience for the client. Cetera has several technology driven programs in this area, including the ability for advisors to use social media. Couch says, Instead of leaving this to advisors on their own, we figure it out and we provide a platform to do it compliantly. A foundation of Cetera s holistic offerings is a keen awareness how highly advisors value their independence, flexibility, and increasingly, their personal brand. Accordingly, Cetera promotes the advisor, and the advisor s relationship with the client, rather promoting the brokerdealer. For instance, advisors have the ability to customize the first page of their quarterly performance report, and include their own photo. Says Couch, our focus in on helping advisors stay front and center with their client. Consulting/Coaching Consulting is a big growth area of broker-dealer RIA business support, and an area where big broker dealers distinguish themselves. Being able to provide a wide-reaching Business Consulting group really comes from economies of scale, says LPL Financial s Executive VP of Business Consulting Mimi Bock. Of course, smaller b-d s have coaching capabilities too, though at LPL it is definitely a focus. Bock is quick to point out LPL has many other programs and activities that support the business side of an RIA or Hybrid RIA s business, including among many other things, robust custody services, an array of technology solutions, fully integrated statementing for client reporting and a broad advisory platform. Further, LPL has a dedicated internal group devoted to learning and development, which creates specialized curriculums for advisors and even their teams. Admins have their own learning and development program as well. But one thing that is unique and special is the Business Consulting group, Bock says. The group works directly with RIAs and hybrids to help them run their business like a business and grow. In terms of business consulting LPL breaks down RIAs business issues into a few core areas. The first is growth: how do they grow the business? How do they look for new clients or get referrals? Here the consulting group offers a whole suite of solutions, ranging from business analysis to services that help RIAs build brand awareness. A second core business issue is efficiency. How can RIAs become efficient business managers? Consultants take apart a business from a process perspective. They identify where the RIA can do things better, faster, even stronger. Client experience and how RIAs are managing this is yet another core focus area for this consulting group. LPL s team provides high-level advice, such as education around client segmentation but other advice is more hands on. We go out to offices and sit down with advisors to have a conversation about the way clients experience everything including the way the receptionist greets people, Bock says. Human Capital and Succession Planning are also key advisor business concerns. How should they pay their staff? Do they have enough staff? How should they value their businesses in terms of succession planning, but more strategically, what are the key execution points? These are all critical questions for advisors, and the consulting group provides answers. Concludes Bock, LPL is doing a lot in this space. As consultants, relationship managers and trainers, we really are the quarterbacks helping advisors to grow their businesses. We really are the quarterbacks helping advisors to grow their businesses. Mimi Bock Executive VP of Business Consulting, LPL Financial Commonwealth Financial Network is another giant indy broker dealer with a large coaching group, part of an even larger practice management department. Practice management supports all the areas where RIAs need help on the business side of things, including leadership, HR, operational efficiencies, revenue growth, and succession planning. Managing Principal Joni Youngwirth has written extensively about best practices in all these areas that can take advisors businesses to the next level. Broker-Dealer Guide / SourceMedia Marketing Solutions Group 10

13 I wanted a culture of yes. What I got was a culture of absolutely. At TD Ameritrade Institutional, advisors are at the center of what we do, and service is at the core of our culture. So if you want to talk about your business, hammer out your goals, or ask us to consider a way to serve you better, we re all ears. Why? Because we re uniquely focused on what s best for our clients. Just like you. TD Ameritrade Institutional. We re listening. Call us at or explore the way we support RIAs at tdainstitutional.com/ourcommitment Follow TD Ameritrade Institutional, Division of TD Ameritrade, Inc., member FINRA/SIPC/NFA. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc., and The Toronto-Dominion Bank TD Ameritrade IP Company, Inc. All rights reserved. Used with permission.

14 Strategy includes looking at your business the same way a consumer products company looks at their product portfolio. Here the practices clients are their portfolio. Sharon B. Herbst VP, Practice Management and Growth, Personal Advisors Group, Ameriprise Commonwealth affiliated advisors can tap into this support from their broker dealer through a variety of access points. Perhaps the most simple and direct is online information, but as Youngwirth points out, this first level of access is more generic and less specific to any one advisor s practice. Instead, advisors can just call practice management, and ask for a consultation, which Youngwirth terms 2nd level access. The consultants are predominately MBAs, with 10 years of industry experience. Our consultants take questions from advisors but these are strategic questions and answers, Youngwirth says. It might lead to a site visit lasting anywhere from a day to several days to an engagement that can last for months. The 3rd level of access is year-long coaching programs. These address all areas of advisors business concerns. Participants gain more than new skills and business knowledge they develop a whole new business peer group. People become cemented for life, says Youngwirth, the program in this sense lasts a career. Commonwealth s coaching program is an intensive, serious, and valuable undertaking for RIAs, but at the same time, Youngwirth says, it s so much fun, yet another reasons for advisors to consider it. People become cemented for life, the program in this sense lasts a career. Joni Youngwirth Managing Principal, Commonwealth Financial Network Strategy includes looking at your business the same way a consumer products company looks at their product portfolio. Here the practices clients are their portfolio. This eye opening insight is provided by Sharon B. Herbst, VP, Practice Management and Growth, at the Personal Advisors Group at Ameriprise. Thinking strategically means optimizing this portfolio to determine who you will serve and how will you serve them. Client segmentation is key. Herbst says, many advisors feel their practice is running them, they aren t running their practice. This is because they haven t grown their businesses strategically. They instead have added clients as they have come along, maybe without even a minimum required asset level or other more sophisticated set of criteria. Ameriprise provides resources to help advisors to segment their book of business. This leads to strategic decisions: of which business to keep, which to sell, and which to hand off to a junior colleague. This strategic thinking could result in a tighter focus on a specific type of client, creating a more profitable practice. The larger strategic goal is to increase the value of the practice itself. Says Herbst, the biggest asset an advisor has is their practice. They need to look beyond just their annual revenues. Dedicated management, the current focus of so much broker-dealer and advisor activity, is key to increasing these values. Having an individual on the advisor s team dedicated to the business, or setting aside time dedicated to this issue, with guidance and support from a b-d, are best ways of reaching this goal, and efficiently growing the value of the practice. Dedicated management is the ultimate smart strategic decision for RIA and broker-dealer alike. A focus on strategy The business of the business has many facets. This can be seen in the ways different b-ds approach the topic and decide where to strategically focus their efforts. Ameriprise Financial s strategy for dedicated management includes support, training and coaching in financial management, human capital, operational efficiencies, and other critical areas for running the business. It also provides an additional area of support for advisors: business strategy itself. Broker-Dealer Guide / SourceMedia Marketing Solutions Group 12

15 all ways open ARCHITECTURE

16 Recruiting Today: IN A TIGHT MARKETPLACE, THE LURES COME OUT Cambridge Investment Research CEO Eric Schwartz has watched the advisor market tighten in the past couple of years, with top talent less likely to jump as quickly today to a new broker-dealer. In 2012, the firm recruited $49 million in GDC the lowest in five years. And while all signs point to Cambridge on the upswing, and back on track to recruit $60 million for 2013, Schwartz says the new terrain has caused broker-dealers, including Cambridge, to re-assess how they court these top producers. I think competition is going to get worse, says the Fairfield, IA.-based Schwartz. In 10 to 15 years, about 85% of this whole channel will be in the hands of six or seven large independent firms. I think it s going to get tougher. Gone are the days when advisors were like salmon during mating season leaving firms at such high rates that brokerdealers could almost just scoop them up with a net. Schwartz recalls when LPL bought Mutual Service Corporation in 2007, closing down that firm, and allowing Cambridge to land close to 150 new advisors in a six to eight week period. Broker-Dealer Guide / SourceMedia Marketing Solutions Group 14

17 Today, with regulatory paperwork increasingly more complex and even the buoyant nature of the market, advisors don t appear to be feeling a need to move. The grass apparently seems as green from where they re sitting right now. Overall satisfaction among independent advisors increased 29 points from 2010 to 2013, and is up 12 points for employee advisors since 2010, according to the 2013 U.S. Financial Advisor Satisfaction Study by J.D. Power and Associates., a global marketing research firm. While many firms say that recruiting is actually holding fairly steady for them albeit it not at the same rate of 2009 they do admit to adopting some competitive strategies in the past months. All in hope that top talent will continue to look for something better and choose them. Paying Big Bucks Up-front money, a practice many don t like to talk about but is very common in the industry, is on the rise with advisors given capital just to move to a new broker/dealer. Top producers usually can count on higher percentages, with small groups getting less. Schwartz finds this a disturbing trend, he says, despite increasing their own front money as well over the past several years. About 10 years ago, Cambridge offered just 2% to 3% in up-front money but today that s closer to an average of 9%. Schwartz says he noticed these numbers increasingly about 8 years ago, and understands the logic behind these sweetened deals. In a competitive market place, up-front money is a great lure. In the nature of business, you always lead with your strength, he says And one of the better ways to attract reps is giving more money away then smaller money. Upgrade In Pay While up-front fees are clearly one way to lure advisors, another is creating better pay structures for advisors once they re onboard. That s a direction Raymond James Financial Services hopes will help them attract new advisors. Called Hybrid Select, the new pricing plan, put in place in April, is aimed at advisors who are discretionary managers with at least $100 million in assets under management, says Scott Curtis, president of Raymond James Financial Services. We saw what the competition was doing and we wanted to make sure we were competitive in that space, says Curtis, who adds the decision was partly in response to RIA aggregator firms and custodial firms including Schwab, TD Ameritrade and Pershing. Here advisors will keep 100% of their advisory fees, paying a quarterly fee instead to Raymond James. Plus, they can run their shop as an independent RIA or sign aboard as an investment advisory representative (IAR). The new model In the nature of business, you always lead with your strength. And one of the better ways to attract reps is giving more money away then smaller money. Eric Schwartz CEO, Cambridge Investment Research has already produced nibbles from interested advisors, says Curtis. And the firm closed its first deal under the new pricing model at the end of May. That person was already in their due diligence and read about this, says Curtis. So here we are a couple of months later and he decided to come along with us. Digital Marketing While having a competitive advantage like a unique pricing model is key today, broker-dealers still have to get these lures in front of interested advisors. As in any business, getting your message to the right people is crucial to landing a sale, or in this case signing an advisor who s open to moving. While referrals and cold-calling still have a role in recruiting, brokerdealers are trying to better target messages to land in front of reps already receptive to listening. At Royal Alliance this micro-targeting involves electronic media. Kevin Beard, the broker-dealer s senior vice president of recruiting says the firm started using a combination of social media, technology plus an outside vendor to create a more targeted process in the third-quarter of Beard says the past methods of sending a mailing to 10,000 random advisors wasn t effective in today s competitive age. I couldn t tell you if they were reading our letter or postcard, or throwing it away, he says. Using electronic media we can make it a little more personal. Royal Alliance now pushes messages embedded with a microsite tag and those who click for further information are taken to a site with content such as a video chat from broker-dealer s president. There they re asked to fill in a bit of information about themselves, and suddenly a mass market blast generates 300 quality leads. From there I can send them meaningful white papers and drip on them, says Beard, of how he stays in contact with these potential new recruits. The firm has already seen results. A $3 million producer signed aboard in April. A $700,000 producer and a $400,000 producer also signed aboard at the end of May. To Beard, there s no questions these targeted messages are working to help Royal Alliance get noticed. 15 Broker-Dealer Guide / SourceMedia Marketing Solutions Group

18 Frankly in any service industry you have to offer more breadth and expertise to work with the best. You can t be mediocre. You have to offer 110%. Andrew Daniels Managing Principal, Business Development, Commonwealth By using electronic media to get our message out, we have advisors who want to take a look at us and invite us to the bake-off, he says. Cannibalize Competitors To some broker-dealers, there s more logic in landing several fish at once rather than baiting their hook just one at a time. While the war plan at Securities America involves recruiting individual advisors the La Vista, NE.-based firm has also had success in chasing and absorbing other broker-dealers. In December, the firm acquired Investors Security Company, and in January added 30 advisors from transitioning Eagle One Investments into the broker-dealer. Securities America is also currently in talks with other firms, and expects these conversations yield additional success in the second half of the year, says Gregg Johnson, Securities America s senior vice president of brand office development and acquisitions. The conversations I am having with them have some common threads, says Johnson. The margins they experienced in the last five to ten years have shrunk because of lower spreads on cash, and because they ve had to spend more money on compliance and supervision. Johnson notes that many broker-dealers started in the 1990s as former brand managers, looking to increase margins. But fast-forward ten years, and margins are starting to shrink, he says. Firms are having to spend more time and resources handling regulatory issues and as a result finding they now have less time to spend with clients which they still enjoy. Plus consumers now feel more empowered to push back litigiously when they feel wronged. And even one or two customer arbitrations can be crippling, to a brokerdealer both in assets and reputation, says Johnson. Securities America is starting to attract broker-dealers interested in being acquired. A press release published earlier this year about the firm s two deals, generated phone calls from others who wanted to learn how they could make that transition as well. And that, says Johnson, is a clear competitive advantage. It s not an easy thing to do to help a broker-dealer go through the process of a 1017 filing, he says of the regulatory process a firm must go though if they undergo a merger, acquisition or succession. The communication with advisors, moving data and accounts, making that process of becoming a branch office as smooth as possible, we think we ve developed that. More Flexibility Commonwealth s game plan to stand out in this competitive space involved offering more options to advisors. Understanding that many brokers were interested in the RIAonly space, the Waltham, MA-based firm now lets reps sign in a variety of guises from coming onboard as a RIA, an IAR, a series 7 registered rep or even a hybrid of these positions. The firm is also offering greater flexibility, even after an advisor has joined. The new option is now called a glide path, says Daniels. Here, a rep can sign with Commonwealth in one capacity, but then later shift to a different role without having to change their infrastructure inside Commonwealth. True, Daniels admits that offering more choices make the process of running their own business a bit more complicated. But in today s tight market place, broker-dealers have little choice if they want to look like a competitive player in the game For the bigger firms, that continues to be the plan to find ways to stand out from the rest of the crowd particularly at a time when advisors appear to feel less of a need to move. Broker-dealers don t think that their lures will get advisors back in motion to the levels they were in recent past years. But they do believe that without something competitive better pricing, more up-front money, or more options of how to join a firm they re in danger of sitting on the river banks, with little bait and little chance of landing today s top talent. Frankly in any service industry you have to offer more breadth and expertise to work with the best, says Daniels. You can t be mediocre. You have to offer 110%. Broker-Dealer Guide / SourceMedia Marketing Solutions Group 16

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