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100% Upfront & 100% Payouts!

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100% UPFRONT & 100% PAYOUTS!!

     Sound unreasonable? Yes, because it is! It is possible to get one or the other but not at the same time. If anything, payouts are going lower and lower every year. However, there are more important issues looming over the Broker-Dealer industry, and it’s not the end of the world as predicted for September of 2017, even though it might seem like it.  The business model for most financial representatives has shifted, and this is only the beginning. The consolidation of many broker-dealers has begun, mergers are in the process, levelized payouts are in place, and the movement towards advisory fees are in full swing. All this and more to come because of the threat of the DOL, the Department of Labor ruling that has been pushed back to July 2019. 

It's time to adapt to the new Broker-Industry! Welcome, it's a whole new world!

     Many Independent Broker-Dealers have been spending millions of dollars for what seems like an endless trail of crumbs to how, and what is being implemented as the new standard of business for financial advisors. It also appears that many broker-dealers have taken advantage of this window of opportunity to force their advisors into a fee-based only model. There are more than a handful of firms already forcing advisors today to sell, “corporate only,” fee-based advisory business.

This opportunity is allowing broker-dealers to collect more administrative fees, more ticket charges, and more revenue in other areas of profitability, helping firms subsidize the upkeep and costs of compliance with these new fiduciary regulations around the corner.

    The movement into fee-only business models is not all that bad. Having a fee-based business can benefit advisors by annuitizing their book of business with residual income year after year. The same movement, however, is pushing transactional advisors who have a heavy business mix in variable annuities, mutual funds, stocks, bonds out of business. The strong arm in this sector is also creating an opportunity for buy and selling of practices across the country, however not at the emotional tied levels that a lot of advisors have for their books. 

    Transactional books are earning somewhere around 1-1.5x’s earnings while fee-only advisors are making between 2.5x’s to even as high as 5x’s earnings. We recently heard of a group in California receiving almost 8x’s earnings for a 5M dollar book of business, but those types of deals are infrequent. Either way, the industry is changing dramatically, and for advisors to survive, they must adapt to change. The top payouts and upfront bonuses for advisors are going to fee-based reps with 25M or more in fee-only revenue with the best offers at 100M or more in assets under management.

    Our advice in today’s marketplace is- if you can’t beat them, join them. Begin to annuitize your book and start looking at third-party money managers. There are many great companies like SEI, Assetmark, and others that will allow you to gather assets while you dive deeper into this new world of fees. If you are an experienced advisor that loves to manage money, then start looking at the administrative costs of your broker-dealer fee schedule to increase your earnings and lower your expenses. 

Moving towards a fee-based business doesn’t mean that you have to give up other products, but your business mix should have 60% more in fee-based business than anything else. 

    Technology will separate you from the rest of the pack so start looking at companies like eMoney or MoneyGuidePro to provide your clients with high-end financial plans. Your broker-dealer is more than likely to provide a subscription discount for those services. Morningstar Advisor Workstation is ideal for research as well as companies like Scanalytics Portfolio for the tech-savvy advisor. Albridge Wealth Reporting, Black Diamond and other businesses like Morningstar Office are also perfect additions to performance reporting software.   We have the full list of advisor and office technologies that we can share with you, feel free to email us at This email address is being protected from spambots. You need JavaScript enabled to view it. for more information. 

    The first call to place is always within your broker-dealer to learn more about what they can offer you and your clients. When you initially signed on with your current firm, they vowed to provide you with the best service, the lowest fees, the best technology and the highest payouts possible. If you have exhausted your efforts at your current B/D and feel that the deficiencies outweigh the headache of transitioning your clients, please call us at 661-266-0099. 

We represent the top broker-dealers in the business and can help you navigate your way to the right firm, with the right technology and the right payouts,  confidentially and at no cost to you.  

Blessings to you, your family and your business! 

Dave Reyna

Who are the Best Broker Dealers?

 

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Who are the Best Broker Dealers?

 

     It's a question that many financial advisors will be asking themselves at one point or another in their career. Based on recent news, it might be something you'll be asking yourself very soon with Department of Labor rulings, FINRA compensation disclosures and a potential swarm of broker-dealer mergers and acquisitions on the horizon. However, there are a couple of bigger questions to ask yourself first.

 

Who are the Best Broker-Dealers Based on My Business Mix? 

   

 

     Many advisors focus on payouts and upfront money as a priority when adding broker-dealers to their short list. While I agree that compensation is vital, it's not as important in comparison to the success of finding the right firm for you. Many broker-dealers are willing to pay a substantial amount in transition bonus to join them. However, you need to ask yourself why they would pay so much to attract you?

 

     Let me put it this way for you. A transition bonus is more like an advance of your commissions. You will pay taxes on it and it's a reflection of how much this firm will be profiting from your affiliation in the years to come.

 

     Broker-dealers need to recoup bonus money from you as soon as possible. Most of them need to break even on the money they provided you within three years of you switching over. The more money they can make from your fee-based accounts, ticket charges, monthly fees, etc. The more upfront money they’ll throw your way. After those few years, it’s all profit for the broker-dealer, and if you choose one that provides you money over your actual needs, I guarantee you'll be making another broker-dealer change sooner than later.  

     The more money a B/D offers you, the more expensive that broker-dealer will be for you, your business and your clients down the road.   More upfront usually means higher costs and lower payouts which ultimately decreases your revenue. Don't get me wrong: broker-dealers need to make money to stay in business, and many provide a needed service to the industry, but there's a happy medium to achieve.

 

     You are better off negotiating administrative fees, ticket charges and increasing payouts than trying to increase your upfront "bonus."

 

And the second question you should ask yourself is,

 

Why am I looking for a broker-dealer?

 

     For many advisors this question is valid for others not so much. Maybe you've received inside information that your broker-dealer isn't going to survive the costs associated with complying with the new DOL ruling. That makes total sense, and now you know you have to make a move.

     For others, you don't fit in into broker-dealer culturally. Maybe you're one of the only few advisors with a fee based only approach while everyone else is selling life insurance.

     Whatever the reason and before you Google, "Who are the best broker/dealers for my business?”, You need to take a self-evaluation of your business. You need to profile yourself, your business mix, your assets and your business continuity just like you would a client coming into your office. Dive deep into your situation and investigate what deficiencies you want to fill by making a move, and what other areas you might be willing to sacrifice.

     What I'm trying to say is, the perfect broker-dealer does not exist. Where one broker-dealer can satisfy the biggest complaint you have, switching to another firm can also create a vacuum of other issues that you won't appreciate down the road.

     The bottom line is that you need to know what questions to ask yourself, and what questions to ask prospective broker-dealers before jumping on the phone with 5-10 different firms who might end up being replicas of your current B/D or just a box of more issues.

     When a client needs direction on how to invest who do they call? Hopefully you, right? You’ve spent countless of hours, years, even decades researching, learning and investing your knowledge of the market. You do that because you want to provide your clients with the best strategies, investments and return on their money.

     We are no different at RepRecruit, LLC, and we have the same goal as you do. To provide you, our client with the best possible broker-dealer choice. We have researched and vetted every quality broker-dealer in the business. We take the time to help you evaluate your situation, your business mix and your needs to match you up with the best possible partner in the industry.   Our goal is to help you find your next broker-dealer and make it the last move you ever have to make.

  

Finding a New Broker Dealer in today’s economy?

 

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Finding a New Broker Dealer in today’s economy?

Better call a divorce attorney... and a marriage counselor it's just about the same!

 

 

     The perfect storm is brewing and nobody really knows where to turn. Smaller boutique broker dealers having been a growing trend but now many of those are being forced to consider their own strategies going forward. The cost of staying compliant with the DOL ruling has already reached over a million dollars in revenue at some of the larger independent broker dealer firms. That can mean a forced merger with a larger firm if these compliance expenditures continue to rise.

     Larger independent broker dealers are also facing the same issues but at a much larger scale. It’s having a trickling affect throughout their organizations including their hiring practices. They are now turning reps away that have a high ratio of transactional business for the highly coveted advisory, fee based business models. If you have a few disclosures on your U4/U5, you may find it almost impossible to get approved through compliance departments right now.

     Broker dealers have been warned by FINRA Chief Richard Ketchum last month about hiring problem brokers. The article written in Investment News by Mark Schoeff Jr. stated that the regulators are using advanced data analytics to find the bad seeds, undermining a firm’s culture. Broker/Dealers were shaken up by FINRA’s warning and now even small disclosures on your back ground check are becoming disqualifying triggers for affiliation.

     Broker/dealers have an uphill battle trying to cope with FINRAs’ warnings. Some B/D’s are trying to outsource those responsibilities to expensive but dedicated compliance firms. All this still leaves the smaller boutique firms with their hands up in the air. This DOL thing is going to be very expensive and that’s not even the biggest issue when you think of the level payout requirements that need to be in place by January 2018.

     The drop of commission revenue for each advisor who is required to act in a fiduciary role on qualified plans is going to affect everyone in this industry. This may be great news for some clients but not for all.

     Analysts anticipate that advisors will be forced to drop smaller accounts, while conspiracy theorist believe that all this is an attempt for the US government to gain control over retirement assets. Those theorists maybe right, we may have another 5Billion dollar website to promote the new Obama/Hillary plan or according to Trum, his websites only cost 3 dollars- we’ll see what’s next. Either way, there is a lot of uncertainty in the industry today and we all better be prepared in one way or another.

     One thing is for sure. If you don’t have to make a broker dealer change right now, don’t do it. But be sure that your firm is working at protecting your clients, your business and the longevity of your practice. We have spoken to some firms who are making light of the DOL. They feel that it’s not going to be a big deal and that people are over reacting.

 

When entities like the DOL start poking around with the backing of the US government, it’s only a sign of more regulation to come.

 

Who knows, they may want to start banning and confiscating your business calculators- ridiculous I know, I’m joking but things are getting pretty crazy and you never know!

 

     Better to be safe than sorry Get involved with the broker dealer you hired to manage and service your business. Find out what they’re doing to protect your clients and your revenues. Then start preparing your own clients, especially those in qualified accounts. Those clients, if suitable- need to start thinking about a level based advisory account that fits their portfolio.

     Keep in mind that what you feel is in your clients’ best interest, is not a reality anymore. It’s what the DOL thinks is in the best interest of your client- even if your client doesn’t think so.

     With all negative dooms day press- keep this in mind. We still live in a great country and we work in a great industry where we can make a true difference in the lives of our clients and our families. It also doesn’t matter who is in office, or what regulations go into play, for those who believe…

 

IN GOD WE TRUST

 

So keep at it and be prepared. If you determine after speaking with your firm that they are not prepared for what the future of this industry holds, then give us a call at RepRecruit. We have our ear to the ground, our eyes in the sky and can help you make the most informed decision in making your next broker dealer change.

 

Changing Broker Dealers..... AGAIN??!!!

 

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Nothing is more frustrating than having to call clients for another signature because you either forgot paperwork, your broker dealer didn't let you know of a new disclosure form or your assistant didn't give you the right application before you drove 3 hours to a client meeting except...

                                             changing broker dealers again!

With the introduction of the new Department of Labor- Best Interest Contract - coming up in 2018, insurance companies selling off their broker dealer relationships or accounting scandals forcing your broker dealer into bankruptcy, changing broker dealers seems to be more common than a variable annuity 1035 exchange.

Advisors spend between 3-6months looking through broker dealer kits, visiting new broker-dealer headquarters, sitting through eye glazing technology demonstrations and convincing their staff that changing firms is a necessary evil.  That's on average! Larger groups can take between 1-2 years before finally pulling the trigger.  Then comes the fun part.  Thousands of unfamiliar new account forms to populate, new login screens, new passwords, new disclosures, new procedures, new day to day procedures-

                                                     NEW EVERYTHING! 

The entire transition process can take upwards of six months or more to be 100% complete and the same goes for staff to be acclimated to the new broker dealer procedures. Then, once the dust settles, once all your clients are moved over, once you start getting back to your daily routine, once you start making money again- you find out your firm is either being sold to another private equity firm, consolidated to another broker dealer, or a scandal/arbitration has hit it so hard that it may not survive.  Now what?

Your hands and fingers still haven't recovered from the callouses left from typing out new forms and getting hundreds if not thousands of signatures from your clients- And now you may have to do it all over again???!!!!

Here are 3 tips to help you avoid giving up on this business and heading to the bar for a life of alcoholism...
  • Don’t Stress Out - Usually larger broker dealers with deep pockets are the only ones that have the resources to acquire other firms. That can mean better technology, more products and a nice menu of resources. It can also mean a retention bonus for you as well. Notice that we didn’t say better service or lower fees. Larger firms lack personalized back office support and are usually more expensive.

 

  • Take your time - It takes about 15 months before you start seeing any negative or positive changes in fee structure, culture changes and other resources. This time period can provide you the opportunity to feel things out and work on your, “just in case” Emergency Exit Plan.

 

  • Call a 3rd Party Recruiter - Calling someone like RepRecruit can give you an unbiased look at your current firm and provide insight at what other reps are doing. |They can also give you a lay of the land to help you narrow down better firms based on your business mix, culture, technology needs, payout requirements and transitional bonuses.  RepRecruit will flat out let you know if it serves you to stay with your current firm or start looking.
Give us a shot- it's 100% confidential and at no cost to you!  Sometimes the best move is not making a move at all and we can help you determine that.

A Broker/Dealer story – Truth or Urban Legend?

Back in the early 2000’s there was a TV series I used to like called Freaky Stories where every episode started with:

“This is a true story, it happened to a friend of a friend of mine”

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Should I stay or should I go?

Even thinking about leaving a Broker Dealer creates anxiety with many financial advisors.

 

“Should I stay or should I go now? … If I stay there will be trouble - if I go it will be double.”
                                                            - The Clash

That may be true for many turning points in your life and it clearly holds true for decisions you make with respect to your B/D too.

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Deal or no Deal? Your Next Broker/Dealer Offer Awaits You

The television show Deal or No Deal became a big hit in 2005 with 26 numbered boxes paired with 26 models poised to reveal the contestant’s “deal” to the world. It was a show that involved little to no intellectual capital to win. Choose one box and decide how stubborn or greedy you wanted to be. Keep your number and hope it contained the 1 million dollar prize or choose a deal from a “broker” in the dark upstairs office that make an offer based loosely on the remaining odds.

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Considering a Broker Dealer Change? 7 Critical Details

This document is about deciding whether or not a Broker/Dealer move makes sense for you.


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Advisor Transition Readiness
Merger & Acquisition Readiness for Boutique Broker Dealers
Recruiting Readiness for BDs, RIAs & OSJs