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Where has the financial services industry gone over the last 20-years?


I often reflect to when I first started in the financial services industry as a Business Development professional.  Knew nothing about the industry, what I was doing, the many acronyms used, or what GDC stood for.  I sat down for my interview with the President/CEO of a small regional broker-dealer and the last thing he told me was, “Jeremy, don’t ever try and sale anything in this role, simply build strong trusting relationships with each person you meet.  Never mislead, misguide, or lie to a prospect and always act with the highest level of ethics and integrity and you will do great in this profession.”  Those are words that have stuck by me throughout my career and as I reflect on where the industry has gone over the last 20-years those words mean more today than they ever have.

Fast forward 20 years and we are now facing the most consolidation in the financial services industry amongst broker-dealers than we have ever seen and that isn’t going to discontinue.  Margins are getting slimmer for broker-dealers and costs to remain relevant and competitive are continuing to rise.  What has the consolidation, rising costs, shrinking margins done to the financial services industry?  In my opinion, it has caused many financial services executives and professionals to lose much of the integrity and ethics that is what made this profession so great when I first began nearly 20 years ago.  While many may believe this isn’t the case, let’s look at the many examples that I have either experienced or heard from those that have experienced.  Broker-dealers are being bought by private equity firms that tell the advisors that everything will be business as usual only to learn that costs are going up to the advisor, programs and services are changing, and payouts are dropping.  Executives within the broker-dealer community after thriving on the success of their Business Development teams are reducing compensation to their Business Development teams although they are doing the same amount of work to reduce costs.  When professionals are exploring options with other broker-dealers, they are being misled or completely lied to regarding the long-term plans of the broker-dealer because executives realize talent is hard to come by.  Recruiters are telling advisors whatever they want to hear to earn their business realizing they will have to clean up the problem once the advisor is onboard.  This is just a few examples of what is happening on a regular basis in an industry that is supposed to be built on trust and integrity.  While these examples are happening in our industry on a regular basis, it begs to question what will the industry we have come to know as the normal going to look like in the next 20 years?

It truly saddens me to think of many of these examples that have turned an industry I have personally grown to love and have a true passion for into an industry I question and those partners that we at Trusted Visions choose to partner with.  This is a serious problem as financial advisors are putting their clients and their livelihoods at risk when choosing to partner with a particular broker-dealer.  Professionals in the industry are putting the livelihoods of their family at risk when choosing to switch firms.  These are serious decisions that should be taken much more seriously by those involved with helping that person make this ever so important decision.

In closing, I ask those in our industry to take a step back and reflect where we have all come from, the industry that we have come to make a great living at, and ask yourself if there are some areas that we can each do better.  Understanding that margins are shrinking, costs are rising, and revenues must rise to stay relevant doesn’t mean that any one of us need to waiver from where we began in this industry.