From the July 2009 issue of Boomer Market Advisor • Subscribe!

Broker/Dealer and Advisor Sound Off

We asked top broker/dealers and advisors, "What one issue in the broker/dealer industry is keeping you awake at night?"


Marshall Leeds,
Chairman, CEO and President,
Summit Brokerage Services

I was at a Pershing conference recently, and I was thinking that with all that's going on, we're still making money and recruiting advisors. So nothing really keeps me up at night.

But if I had to pick one, it would be meeting the increasing expectations of our advisors. In the current recruiting environment, competition for quality advisors is fierce. It's the first time in 30 years that broker/dealers have their choice of advisors and advisors really have their choice of broker/dealer. When they decide to go with us, it's because we're that much better than everyone else. We turn down 80 percent of the advisors that come to us, because we want the absolute best of the best. By that I don't necessarily mean large producers with a significant amount of assets under management, but reps with the right attitude. A lot of people will say they're worried about the regulatory atmosphere, but it was too lax for 20 years, and now it's too tough. That will work itself out and settle down.

Steve Wershing,
CFP, President,
Ensemble Financial Services

What I'm worried about is not necessarily specific to our business, but it's the federal government getting more involved in business in general and the money they're spending to do it. They have no business getting involved in Bank of America and Citigroup. It's bad for business and bad for the country.

One of the reasons we're in this mess is because the government got involved in the first place and facilitated behavior that created bubbles. I understand their motivation for doing it; it seems like the end of the world (which it's not). They can't do any better than capitalists in getting us out of this. The problem is that they serve the wrong interests, which creates more inefficiency and problems.

Mark Sides,
Chief Legal Officer,
Woodbury Financial Services

I'm worried that the vast sea of regulatory actions will drive advisors away from Woodbury and away from financial services altogether. The new wave of regulatory action in response to Madoff and Stanford is understandable because regulators want to do the right thing. I don't fault them for that. But the result will be onerous and too costly for many advisors to do business.

For advisors to leave the business now will be particularly detrimental to the middle class, who need affordable and unbiased advice now more than ever. The alternative to how regulators are reacting is to provide fraud prevention at the lowest possible price in order to still be effective. But they're thinking prevention at any cost, and that's a big problem. Again, I think they're trying to do what they see as best, but I wish it were a bit more targeted.


James Michaud,
Michaud Insurance and Financial Services,
Fall River, Mass.

The thing that keeps me up is the constant reviewing in my head of the plans already in place, especially for pre-retirees and retirees. I have to make sure they're not dipping into their equity position, and are taking their monthly dependent allowance cash flows from their money markets and other appropriate accounts.

I just have a feeling that the panicked Monday morning phone call is coming, and I have to know what's happening in the market and why.

With everything that's happening, that's a tall order. Most of the phone calls I get are overreactions, and that's why they have an advisor in place; to calm them down and see them through. They've been through downturns before, but they're quick to forget, even as something as recent as earlier this decade.

Terrance Herr,
Herr Capital Management,
Chicago, Ill.

My broker/dealer's divestiture from AIG is what's keeping me up at night. The communication has been extremely poor at FSC. They're consolidating departments and dealing with compliance has been a nightmare. You never know who you are going to get on the other end of the phone. They're laying people off and the people who survive have low morale, wondering if they'll have a job the next day. In a broader sense, I worry about who will regulate the industry and how. There's so much uncertainty about legislation and regulation coming over the wall. And I definitely don't think the CFP Board should become a regulator. That's a bad idea and not a good fit.

Mark Lamkin,
Lamkin Wealth Management,
Louisville, Ky.

The proactive investment process is what keeps me up at night. By that I mean it's almost a paradigm shift for us. It's not market timing, but it's no longer just sitting on our hands with a buy-and-hold approach that Bogle and others preach. It's almost a type of trend investing, but we have a process in place that gets people to the sidelines quicker when the trend breaks down. You have to have that strategy in place, from a defensive standpoint, in the current environment. All the successful guys have it.

Speaking of defensive positions, one other thing that keeps me up is the poor quality on the bond desk at my broker/dealer. For its size, they should have a whole lot more options on the bond side of the business, and they have almost nothing. Again, it's really a problem in this type of environment.

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