Its All In The Details
Last year, we received the most startling and disappointing news of our professional lives. With no forewarning, we were told during a conference call that our broker-dealer was being sold and we had two months to decide whether to work with the new firm or find ourselves a different b-d. This, after nearly 40 years affiliation with one company and no particular desire to move.
If recent rumblings around the industry are true, you may find yourself looking for a broker-dealer and having no idea how to go about choosing one. Maybe by telling our story we can help you weather an incredibly trying experience that, if handled correctly, could position your company for an even brighter future than you envisioned. In retrospect, our firm is better off now than it was before.
Langdon Ford Financial, started by Bill Ford in 1966, always has focused on comprehensive financial planning. Having a superior broker-dealer is critical to that focus.
Since we joined the firm more than 20 years ago, we have believed in and will continue to believe in the career agency system. Our strategy is to hire and retain productive, high-caliber advisors who, if they are happy and appropriately supported, will attract good clients and develop practices that will remain productive for years. This strategy has brought success to our advisors and our firm for nearly four decades.
However, many insurers are looking for alternative distribution channels because they believe the days of the career agency system are numbered. That was the case with our old company as well as the new one that bought our broker-dealer.
We looked at the platform the new insurer offered and saw it was designed for large, independent producers in one- or two-person shops that focus on transactions rather than relationships. But we had more than 40 advisors who focus on comprehensive financial planning rather than securities transactions. And they wanted support from our team and staff.
Though it might have been “easier” to use the platform offered us, it didnt fit our firm, our clients, our approach or our philosophy. We had two months to find a new home.
Though our existing b-d services would not cease operations for two months, the two of us decided to make our selection in one month to give our new broker-dealerwhoever it would beone month to prepare for the transition. We ensured efficient use of our limited time by creating a detailed selection process tied to a rigorous schedule, and we followed both faithfully.
We started by consulting our in-house advisory board, composed of our top advisors. We took one week with them to create and refine a list of the characteristics of our ideal broker-dealer. The final list was long, detailed and included these “must-have” qualities:
–progressive, forward-thinking, with an insurance company affiliation because we are comprehensive planners who do substantial amounts of investment and insurance business;
–an advisor-focused business philosophy that allows us to offer our advisors benefits, advanced marketing, competitive life products and an efficient back office;
–a relationship-based (rather than transaction-based) business model;
–a business mix similar to ours, including agreements with the same mutual fund companies, money management firms and multiple annuity carriers;
–investment advisory and fee-based programs;
–an advanced technology platform that enables us to execute trades and other types of business smoothly;
–a grasp of the capabilities needed to move us to their platform with minimal disruption;
–a step-by-step plan for making the move; and
–continued use of our firm name, Langdon Ford Financial.
Once we knew what we were looking for, the game was on.
Throughout the selection process, we consulted frequently with our advisory board, sharing what we learned and soliciting their observations. We also reported back to the entire staff every two days to keep them up to date on our search.
We felt it was imperative to communicate as openly and frequently as possible to retain the trust of our people, and we did. However, internal communications were difficult because of the legal restrictions placed on us by our existing b-d.
We could not “recruit” our own advisors to join us at another broker-dealer, nor could we do anything to impede our current b-ds efforts to retain our advisors. It was like a blind taste test because we could refer to our 40 suitors only as Company A, Company B, etc. An attorney screened all communications before they went out to make sure we stayed on safe legal ground.
Difficult and stressful as it was, the process worked. Because we consulted with our advisory board and developed a clear, detailed list of parameters for our search, selecting the finalists was not difficult.
But we stuck to our process and took two weeks to talk to all 40 companies vying for our business and made the first cut. We went back for more talks with the remaining firms, made another cut, then launched yet another round of talks.
All the while we gathered information by soliciting input from our advisory board and colleagues in the business, and by reading stacks of information from the companies. We took trips, held meetings, conducted conference callsyou name it, we did it. Near the end of the first month we were down to three finalists.
Even then, the decision seemed to present itself because we had such a clear idea of what we wanted. We found some companies that say one thing and do another. History has a great way of teaching you about the future.
In the end, we went with the company that, in addition to meeting our criteria, seemed the most honest when answering the critical question, “How do we know you wont abandon us the way our other broker-dealer did, forcing us to go through all of this again?” Only one could answer that question to our satisfaction.
What we found was a company as obsessed with detail and as focused and maniacal about getting it done quickly and correctly as we were. Every day that week, experts from the company came and went, setting up technology, licensing and back office support.
We were anxious about who from our firm would show up for work that first day because we couldnt tell anyone who we chose until the “blackout” period ended. Forty of our advisors showed up, demonstrating their faith in us, affirming our faith in them and proving yet again that this business is all about relationships.
It took only five months to make the transition from our old platform to the new one, which meant that we had to “re-paper” 40,000 client accounts. The work was tremendous and we hired extra help to get it done, but it gave our advisors a reason to get in front of all of their clients.
Once the clients understood the transition and that it would not affect their holdings, pocketbooks or relationships with their advisors, they were fine with it. Our people strengthened their relationships with their clients and even got some new business in the process.
Its been about a year since we learned that our old broker-dealer was terminating us. Traumatic as it was, the experience was positive on several levels.
We got a new broker-dealer that provides us better and more efficient service than we had before and shares our business philosophy. Our firm is stronger because we weathered a traumatic event by sticking together and trusting each other. Advisors comment at firm meetings about how everything we promised came true after the switch. Theyre happy, so were happy.
Looking back on the experience, we identified 10 rules of thumb you can apply if you find yourself in a frantic search for a new broker-dealer. (See sidebar.)
If you follow your process, trust your gut and do your homework, you may find yourself one year laterlike usthanking your old broker-dealer for cutting you loose.
Steven P. Ford, CLF, LUTCF, and John H. Langdon are managing partners of Langdon Ford Financial, Parsippany, N.J. Their e-mail contacts are email@example.com and firstname.lastname@example.org.
Reproduced from National Underwriter Edition, April 8, 2005. Copyright 2005 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.