Finding a New Broker Dealer in today’s economy?



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…




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.



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