When considering a change in broker-dealers, financial advisors should ask essential questions to ensure they make an informed decision. Here are some key questions to ask:
What is the broker-dealer’s reputation and track record? Look for information about their financial stability, regulatory history, and past disciplinary actions. Ask if they have any current or pending issues with FINRA or the SEC.
How long has the broker-dealer been in business? Stability and experience can be crucial factors in assessing a broker-dealer’s reliability.
Is selling the broker-dealer a potential decision in the next ten years?
What types of products and services does the broker-dealer offer? Ensure they have the investment options and tools to serve your clients effectively. It’s helpful to provide a list of your current vendors, alternatives, and other current companies you use for your clients.
What is the fee structure for advisors and their clients? Understand the costs involved, including hidden fees, and how they may impact your business and clients. Provide the prospective broker-dealer with your current fee schedule and request a proforma to show your net cost and compensation going forward.
What level of support and training does the broker-dealer provide to its advisors? A robust support system can be invaluable for your professional growth and client satisfaction.
What is the technology platform like? A user-friendly and efficient platform can streamline your workflow and improve client interactions. Scheduling a technology demonstration of their platform is a great next step.
How is compliance handled, and what support is provided to ensure adherence to regulations? Regulatory compliance is critical in the financial industry. Do you report to a regional OSJ, or can you report direct? Can you be an OSJ and earn overrides on advisors in your group?
What is the broker-dealer’s approach to handling client relationships? Ensure their values and client-focused approach align with your own.
Can you speak with current advisors affiliated with the broker-dealer? Hearing from existing advisors can provide valuable insights into the company’s strengths and weaknesses. Searching for advisors within the prospective broker-dealer online and calling them directly is a great way to listen to the truth about the advisor’s experience at the firm.
What are the termination policies if the relationship doesn’t work out? Understand the exit process in case you need to part ways in the future.
How does the broker-dealer handle client complaints and disputes? Assess the company’s conflict resolution process and customer service standards.
What is the financial stability and reputation of the broker-dealer’s clearing firm (if applicable)? The clearing firm plays a vital role in processing trades and handling client assets.
Does the broker-dealer carry errors and omissions (E&O) insurance? This can provide additional protection for you and your clients in case of errors or omissions. What is the deductible?
Remember, choosing a broker-dealer is a critical decision that can significantly impact your business and clients. Take the time to gather as much information as possible and consider how well the broker-dealer aligns with your professional goals and values. Call us today at 661-266-0099 and we’ll make sure every question is asked and answered before committing to the move.
