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June 01, 2006 at 04:00 AM
When independent broker/dealer reps consider joining a new B/D these days, they tell Jonathan Henschen that they “want a firm that will leave me alone–that will stop restricting my world.” This Marlene Dietrich approach reflects the underlying dilemma of independent broker/dealers and their reps–interdependence versus independence–and is one of the main dynamics in play when it comes to recruiting reps, which happens to be the business that Henschen & Associates, based in Marine on St. Croix, Minnesota, is in.
Greg Sauer of The Primary Group is in that same business. Speaking on a panel addressing the state of recruiting at the Fidelity Executive Forum in Scottsdale, Arizona, in April, Sauer said he had detected some major shifts in rep portability over the past five years. “Pre 9/11,” he said, referring to the reasons reps would change B/Ds, “it was all about the money.” Post-9/11, everyone stayed put, but now, Sauer sees more rep movement due to the perception that service might be better on the other side of the fence. Moreover, “human factors” are more important to reps these days, he argues, and maintaining a good quality of life is a key factor in their business decisions.
Another speaker on the Fidelity panel–Mark Mettelman, president and CEO of the broker/dealer Triad Advisors, which can count about 275 reps–argued that reps’ current reason for changing B/Ds is “rarely payout; more often it’s a change” in management or ownership that produces some kind of “cultural” change at the B/D.
Executives from a number of broker/dealers interviewed for this article suggested that the days when the big producer got red-carpet treatment at every B/D are over, killed off by the increased burden of compliance and the fear of big fines. “Places where one or two hits on your record were okay aren’t anymore,” says Henschen, and forget about changing B/Ds if you have an unresolved arbitration pending. Henschen believes that some B/Ds are overreacting on compliance, prompting some to depart for firms that are perceived to be more welcoming of reps who do a lot of equity indexed annuity business, for instance, or variable annuities.
