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In today’s environment in the financial services’ space, we have seen the greatest consolidation in the industry and this will only continue.  Costs are going up, regulatory issues continue to surface and technology costs are also rising.  To remain competitive, many broker-dealers are being sold and this will continue to be the case for many years to come.

If you are considering moving your practice to a privately held broker-dealer it is important to know what their succession plan is going to be, or are they exploring their options to sell the broker-dealer.  If they are a publicly held company, you should go into this scenario with eyes wide-open.  The management of the firm’s first and foremost interest is to satisfy their shareholders, not you the financial advisor and client.

Lastly, are they owned by a private equity company?  Many private equity companies have bought into the financial services space for a variety of reasons.  Many professionals believe going to a private equity firm is not the right path to go.  I would tend to disagree with this opinion.  Private equity firms have deep pockets and typically invest a great deal into the infrastructure of the broker-dealer.  It is absolutely true that a private equity firm plans to sell the broker-dealer over time, (typically 3-5 years) but this will likely be to another private equity firm.  If the private equity firms keep everything the same after the purchase, then it is a seamless transition for you and your clients and you should see some sort of retention bonus involved.  Everybody wins!