From the November 2008 issue of Boomer Market Advisor • Subscribe!

2008 Broker/Dealer Excellence Awards

Which broker/dealers are getting it right? We asked readers about technology, wealth management offerings, practice management help and -- of course -- payout to gauge which broker/dealers go above and beyond in servicing their reps. We're proud to announce this year's Broker/Dealer Excellence Award winners -- Raymond James, Brecek and Young, Summit Brokerage Services and Ensemble Financial Services.

Category: Large Independent Broker/Dealer

Raymond James fast facts
Who: Raymond James Financial Services, Inc.
Where: St. Petersburg, Fla.
Years in business: 34
Number of producers: 3,148
Total assets managed by producers: $119 billion
Avg. gross per producer: $330,438
Min. production level required: $250K (for branches)
Clearing firm: Raymond James & Associates, Inc.
Parent corp.: Raymond James Financial, Inc.

Truth be told, we're not at all surprised Raymond James came out on top in this year's large independent broker/dealer category. Advisors are extremely impressed with the house that Tom (James) built. "If I were to leave my current b/d, I'd take a hard look at Raymond James" is a phrase we constantly hear, especially as we put together our annual broker/dealer guide in July (for the complete issue, visit www.boomermarketadvisor.com).

So how are they doing it, especially given the current market turmoil? It's not as exciting (or as complicated) as you might think.

"Two years ago there were people who characterized Tom James as old-fashioned," says chairman and CEO Richard (Dick) Averitt. "When we were asked nearly a year ago how we missed the sub-prime market, the answer was, 'Well, we thought you should loan money to homebuyers who had a job and could put 20 percent down.' That was really old-fashioned then but today it looks like it was brilliant. But it's the way we've always run the company. It's never been about the hot, new thing. We don't have a mascot, but if we did, I'm starting to think it should be a tortoise."

Another reason for their success? No matter how big they get, they maintain a hands-on approach and don't forget about the advisors that have been with them from the beginning.

"About two years ago, another industry magazine reported Raymond James had among the highest advisor satisfaction of any firm of the industry. Right after that, although it was the highest, it was trending down. Our internal measurements said that they weren't as satisfied today as they were last year, and last year not as much as the year before that. So we decided to set aside our long-range planning meeting, and I and each of my top executives got on an airplane and visited some of our offices."

Averitt and his team spent one day in each office talking to the office manager, the advisors and the support staff. They started with the question, "If you ran the company, what would be the first thing you'd do different?"

"I sat in an office with folks that have been with us for 30 years; father and sons and daughters. They just kept telling us how much they loved us, and yet I still walked away with nine pages of notes of things that could be better."
With 64 percent of their revenue coming from asset-based accounts (fees and trails), RJ is on the forefront of conversion to fee movement.

"It makes sense for everybody. We think the clients are happier knowing that they're never getting a call because a broker has to make a boat payment. That's not how we think. The only reason to call is because we think we can improve something in your account."

Which brings us back to the beginning and the reason Raymond James has an advantage in the current advisor recruiting environment, especially given what's happened at the wirehouses.

"We've been very selective in our process. We continue to have what we think are some of the highest standards in the independent side. This just allows us to look at more qualified people. We think it's a great opportunity to find the best people."

Category: Mid-Size Broker/Dealer

Brecek & Young fast facts
Who: Brecek & Young Advisors, Inc.
Where: Folsom, Calif.
Years in business: 16
Number of producers: 350
Total assets managed by producers: $5.1 billion
Avg. gross per producer: $137,000
Min. production level required: $100,000
Clearing firm: National Financial Services
Parent corp.: Security Benefit Corp. (as of October)

Brecek & Young continues to roll. This is the second year in a row the firm has earned a Broker/Dealer Excellence Award, in addition to other industry accolades too numerous to mention. It's a mid-size b/d that's maintained its family-like feel, and our readers took notice. But chairman and CEO Chris Ranney is quick to note business isn't all roses at the moment.

"Given the market conditions, it's obviously a very challenging time for our representatives and their clients," Ranney says. "It's unprecedented in terms of the history and the financial impact that the whole economy is having; the acquisitions, the merges, the sales of assets, etc."

So what are they doing to respond?

"Communicating. As we speak, our chief investment officer, Jess Spitzmiller is on the line with all of our representatives and staff on the state of the economy. Conference calls, meetings, whatever it takes to make sure that our reps are the most comfortable in this tense situation, so that they can provide service and reassuring words to their clients."

One of the firm's co-founders, Roland Brecek, retired earlier this year, but Ranney (who is also a co-founder, along with Hal Young) says it won't mark a change in direction for the firm. There's a reason for its success, he notes, and it's best not to mess with that.

"A lot of the philosophy and service, the mission statement of Brecek & Young, continues on with the new management team that's in place, but the team really isn't new. I've been here for 16 years and the management team has been here for a long time, so with Roland's departure, we'll continue on with a very strong mission of independence, support and success."

In that vein, the firm is practicing what it preaches when it comes to the importance of a diversified portfolio, especially planning for growth and revenue.

"What's very important is we diversify our revenue with our business models (just as our clients should). So our fee-based revenue is off just a little bit because of market conditions, but our other revenue sources are still on track."
As for near-term initiatives, Ranney says the firm will maintain its focus by making sure that it provides the best service, support and investment options to its reps.

"It's what makes us even stronger during these turbulent times. We'll make sure our representatives are talking with their clients. It's doubly important is to call them in tough times, that's what they remember. It's easy to do it when everything is nice and rosy, but when you call them when the market's off by 500 points, that's when it matters. So we'll continue to review portfolios and the asset mixes and en sure everything's suitable for the client in terms of their age, tax and income."

Category: Boutique Broker/Dealer

Summit Brokerage Services fast facts
Who: Summit Brokerage Services Inc.
Where: Boca Raton, Fla.
Years in business: 15
Number of producers: 215
Total assets managed by producers: $4.5 billion
Avg. gross per producer: N/A
Min. production level required: $150,000
Clearing firm: First Clearing LLC., Pershing LLC.
Parent corp.: None

For Summit Brokerage Services, boutique actually means velvet rope. Advisors trying to get past it might find it's easier to get into Studio 54 circa 1979.

"Here's what's different; let's make it easy," says Marshall Leeds, Summit's chairman, CEO and president. "Everybody talks about culture. I ran a 700-person firm and realized at that point you start losing contact with the advisors and their families. You just don't know the wives and children and the family. When we started Summit, we said we're not going to go with 1,000 advisors. We're going to pick and choose who we want. We currently turn down 80 percent of the advisors that come in to us."

This isn't to say they're not taking advantage of the current recruiting environment. According to Leeds, the firm has recruited more reps in the last 60 days than in the previous six months. But it's not as if they just started talking to prospective reps and then quickly brought them on board. Leeds and his team have been courting some for three to five years.

"Their excuse at the time was, 'Well, I'm not leaving Merrill Lynch because of my stock options. I'm staying with Merrill because I need a big firm.' These are obviously no longer excuses. They're calling us because we've been dripping on them and talking to them and eating with them. We're different because if you call out of the blue and say you want to join us today, we immediately stand back and say, 'What's the problem?' There has to be a reason for that change, to go through that pain. Our average relationship with the advisors is 15 years, so we make sure it's the right fit."

One of the things Summit does to maintain its boutique feel is to have a seven-person executive committee call advisors they normally wouldn't call.

"For example, an executive in operations will call somebody who does a good deal of insurance and says, 'Hey, how's everything going? Is there anything I can do for you?' That guy is prone to open up more to a guy that he doesn't know than the guy who might supervise him. So it's a stay-in-touch program."

Another part of the firm's success comes from what is traditionally a source of frustration for advisors - the back office.

"We rank No. 6 in the country in having the highest ratio of staff to advisors. Some people go out and grab advisors and then they build infrastructure. We're exactly different. We lay the foundation for a certain number of advisors that we want to bring on. We build the infrastructure first and then we hire a crew. I look at myself as an architect. I don't dare start the second floor until I finish the first."

And according to Leeds, it's paying off.

"What we've heard from guys that have been with us for a year is, 'I'm glad I did it. I finally found my last home.' And that's exactly what we want to hear."

Category: Niche Broker/Dealer

Ensemble Financial Services fast facts
Who: Ensemble Financial Services Inc.
Where: Pittsford, N.Y.
Years in business: 21
Number of producers: 120
Total assets managed by producers: $1.17 billion
Avg. gross per producer: $170,000
Min. production level required: None
Clearing firm: National Financial Services
Parent corp.: Tompkins Financial

We quickly found trying to attach a standard industry label to Ensemble Financial Services is an exercise in futility. They claim to be something truly unique.

"I'm excited we won in the niche category because over the past four or five years we've been morphing into what I believe is our own niche," says Stephen Wershing, Ensemble's president. "It's one that overlaps the broker/dealer space but doesn't live in it. We've been working to transform from an independent broker/dealer into a comprehensive outsourcing company for independent advisors."

The firm provides the products advisors can get from other broker/dealers, but according to Wershing, so much more. Ensemble set off to be as comprehensive as possible in the support they offer because they recognize that advisors who establish their own practice need a suite of services.

"Advisors, by and large, are really good at guiding clients and really bad at running businesses. There's probably nothing that we offer that you can't get someplace else, but we're the only place where you can get everything in one place. If you want to go down the IRA path it's everything a custodian offers. Then on top of that we have things like virtual staffing and a financial planning department to which you can outsource the preparation of your plans. We have an insurance department to help evaluate a client's risk management program and the development of an insurance strategy. We'll even offer you the insurance product if you want us to. It's everything from a fee evaluation of existing assets, which we offer for a flat fee, to developing the actual strategy. It's all this that makes us such a different and valuable partner for someone who is considering leaving a wirehouse to start a practice of their own."

Even asking something as straightforward as the number of reps aligned with the firm results in a detailed answer that we didn't expect.

"It's not like a broker/dealer where you count the licenses you have, we've got a lot of different types of relationships. Right now we have 53 relationships, not 53 people. Our relationships could be one or two people or they could be scores of people in the same relationship. So depending on how you want to slice and dice it, we look at the relationship as a practice regardless of how big or small."

Where Ensemble rally shines, says Wershing, is with those individuals who are transitioning out of a proprietary or captive environment and creating their own practices. They have a comprehensive approach that goes beyond the typical broker/dealer transition department. In addition to traditional support services, they'll go so far as to make the outbound phone calls for advisors when they leave and actually schedule the appointments to inform clients of the move.

Again ... different, unique, a new niche. Given Wershing's descriptions, maybe a label isn't too far off after all? Possibly "service aggregator?"

"Yeah," Wershing says. "I'll go with that."

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