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

It ain't all about the payout

Many believe the recruiting environment in the broker/dealer space is the best it's ever been. And many believe advisors have more choice in the firms with which to partner. With so much to consider in ensuring the right fit, a few items might get overlooked. Boomer Market Advisor feature writer Dave Port is here to help with 10 items to think about before making the broker/dealer switch.

Upfront enticements
Perks such as transition loans and bonuses are appealing to some advisors. Others prefer them in other ways, such as in the form of lower expenses and fees for software, errors and omissions insurance, etc. "With a lot of broker/dealers, it seems like the bonuses, trips and stuff have gotten out of hand. I appreciate the fact that these aren't big things with my firm," says one rep.

Transitional support
Most firms have transition specialists to support reps during the changeover. "You want a transition team that understands your business and can get your accounts over without much downtime," says Cliff Oberlin, CEO of NRP Financial, an independent broker/dealer based in Bryan, Ohio.

Strength of back-office operation
Sometimes a broker/dealer, which seems right on the surface, might have flaws that reveal themselves upon closer examination. Fast response to inquiries and requests, solid technology and training, the ability to produce user-friendly client statements and the availability of paperless forms and statements are among the hallmarks of a solid back-office operation, says Jon Henschen, president of broker/dealer search firm Henschen & Associates.

Oberlin recommends reps pay any prospective firm an HOV (home office visit) prior to committing to a relationship. "A lot of times one look at the back office lets you know it's not the place for you."

Technological needs and skills vary widely from rep to rep and practice to practice. Tech-savvy reps will want their broker/dealers to provide cutting-edge technology that other non-techies would never consider using. Whatever the case, says Henschen, it isn't enough for a firm to merely provide technology tools. "Just plopping new technology in a rep's lap doesn't do any good. You have to show them how to use it, too."

Practice management support

Some reps look to their broker/dealers for tools to help them run their practice - client surveys, staff hiring, business plans and the like. Others prefer autonomy in that regard. If practice management isn't one of your strengths, consider a firm that can help.

With stricter regulations come greater compliance burdens. Some broker/dealers are better equipped than others to handle the compliance load for their reps. "I believe the No.1 job of a broker/dealer is to keep your license clean and to do all they can to protect you," says Oberlin.

If protecting reps from regulators is job one for a broker/dealer, "No.2 is to pay commissions accurately and promptly," according to Oberlin. It's reasonable to expect a firm to pay its reps twice monthly; some pay weekly via direct deposit.

Product diversity
Sophisticated investors often demand sophisticated investment tools -- private equity instruments, alternative investments and the like. Advisors who have (or aspire to have) that kind of client should align with a broker/dealer whose product offerings range from the very basic to the very complex.

Reps who are challenged to promote themselves and locate enough quality leads to sustain a practice might find a match with a marketing-savvy broker/dealer. Some firms provide their reps with leads in targeted market niches, says Henschen. "That can be a quick, effective way for a rep to get new clients and grow a practice."

For some advisors, it's important to have direct access to top-level broker/dealer executives. "I can talk to the president or COO of the company, and that really is good when you're on your own with a practice like I am," says Gail Harrower of Harrower Financial Services.

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