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

Broker/dealer value and your boomer clients

I've been fortunate to attend a number of industry conferences during the past 12 months, some sponsored by my broker/dealer, others not.

Regardless of the group, the discussion of broker/dealer networks and their importance to the growth and maintenance of the independent advisor practice was inveitably a hot topic. The role of the broker/dealer has changed dramatically over the years, evolving from not much more than a commission processing center into the role of strategic partner, offering practice management assessments and strategies, technology solutions and research assistance. Though it might not be immediately apparent, this new alliance opens many doors for practices that, like mine, focus on retirement income planning, especially during these dramatically changing market conditions. I believe that a thorough assessment on the front end is paramount to leveraging a potential broker/dealer partner's impact on the future success of your practice.

First, for a comprehensive planner, the account aggregation and reporting capabilities provided by the broker/dealer offer a huge value-add when looking at the complete picture of a client's financial situation. Often, if the advisor does not subscribe to a sophisticated client contact management system, the broker/dealer will be the provider of this data. Alternatively, there may be discounts offered by software providers due to your network affiliation. For income planning, a comprehensive client management system is a necessity in tracking ongoing and anticipated distributions such as monthly systematic withdrawals and annual RMDs as well as the tax withholdings on these distributions.

Next, the broker/dealer helps to assess the financial strength of providers. I rely on regular alerts generated from my broker/dealer, which provide detailed information such as ratings adjustments, changes to product availability and note-worthy news clips regarding our strategic partners. Also, the due-diligence department provides industry-wide screening for new product offerings and assists in the research of these products to help affiliated advisors avoid potentially weak products.

Another major role for the broker/dealer is, of course, compliance. Though most of us view compliance requirements of our industry as a tedious necessary evil, the compliance support of the broker/dealer in this ever-changing landscape is crucial. Updates in regard to FINRA Rule 2821, organization of licensing requirements, and oversight of our advertising materials help ensure that we don't step on any landmines and allow us to focus on the business of financial management.

One last advantage is the interaction with other professionals that have similar goals and client objectives. Within our broker/dealer, we created a study group of approximately 10 advisors that focus on income planning, who are not in geographical proximity to one another. Without the threat of competition, we are able to openly share ideas regarding client strategies, marketing and practice management. I feel this type of information sharing process is invaluable, especially for a less experienced advisor eager to strengthen relationships with clients.

My strongest advice is to always view your broker/dealer relationship as the partnership that it should be. The network has a lot to gain from the growth of your business and you are paying for their support of your practice. Utilize the tools that are offered and foster communication at all levels of your firm to ensure that you are getting a good value for your money. My expertise is providing solutions for my clients' concerns. The partnership with my broker/dealer allows me to concentrate on what I do best, and this should be your key point of consideration when exploring a new broker/dealer relationship.

Mark A. Cortazzo, CFP, is senior partner with MACRO Consulting Group in Parsippany, N.J.

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