Having been in the financial services industry and business development division for nearly 20 years, I have witnessed more and more consolidation each and every year over the last 7-10 years.  You must protect your practice, livelihood, and your clients’ assets regardless of the decisions your broker-dealer makes.  Do not be forced to adapt to the changes they make, but decide what is best and what makes sense for YOUR practice.  Don’t be caught in a position where you either have little time to make a broker-dealer change or you have to transition to the new buyer of your broker-dealer.  You may have to consider moving again!

Always have a Plan B in place:

I tell our clients all the time that it is imperative for each and every advisor to have a Plan B in place.  This does not mean that you are making a broker-dealer change, but should changes occur with your current broker-dealer that negatively impact your practice, you know with certainty which broker-dealer you would transition to.  My suggestion is that you work with a 3rd party recruiting firm and discuss with them the priorities of your practice.  That conversation may entail payout, pricing, transition money or advisory business, etc.  Since 3rd party recruiting firms typically work with many of the broker-dealers in the industry, it saves you a lot of time from calling all the broker-dealers individually.  The best part is there are no fees involved to do so.  Be upfront with the 3rd party recruiting firm.  Let them know this is a Plan B and you are not moving unless changes are made.  Do not make the mistake of calling multiple 3rd party recruiting firms, otherwise they will duplicate yours and their efforts.

Look for changes within your broker-dealer:

Recognize these signs to determine if your broker-dealer is potentially the target of being acquired.  The first is the most obvious.  Look at the broker-dealers excess net capital.  Most firms keep the bare minimum in excess net capital, which is understandable, however, have they dropped below the minimum?  Has your broker-dealer been in the regulatory spotlight with more than normal regulatory fines or complaints?  Have you seen some of the leadership or core employees leaving the broker-dealer recently to go to competitors?  If this is the case, it should sound an alarm.  If any of these changes are taking place, you should be looking at your exit strategy and plan accordingly.

Recruiting success and transition packages:

This may seem just the opposite of what you think would be the case with your broker-dealer.  Look at the success they are having with recruiting.  Has there been a tremendous spike in recruiting success over the last 12-18 months?  Has your broker-dealer become more aggressive in their transition package offering?  For example, historically have they offered 25% transition packages and now are offering 40-50% transition packages?  The reality is that most broker-dealers gearing up to be sold are going to become much more aggressive in recruiting so they are able to get as much money as possible from the potential buyer.

Ownership structure:

What is the current ownership structure of your broker-dealer?  If your broker-dealer is currently owned by Private Equity, there is no doubt they are going to be sold at some point in the next 3, 5 or 7 years.  This is not always a bad thing, but know there will be a new ownership structure.  If the firm is owned by a few majority shareholders of a privately held broker-dealer, know what their succession plan is, because nobody is growing younger.  If the broker-dealer does not have a sound succession plan, it should concern you.

I hope that you have found this white paper to be beneficial to you and your practice as we strive to bring content that is informative and useful for the future of your practice.  We at Trusted Visions Placement & Consulting look forward to having a confidential conversation with you to learn more about what other broker-dealers are offering and what maybe the best possible Plan B for you.