More than ever, successful registered representatives need assistance to grow and manage their business. And a large portion of that support comes from the strength of the broker-dealer and its value proposition. The cornerstones of that value proposition encompass a solid capital position, dedicated and effective back-office operations, strong sales support and compliance standards of excellence.
Our industry is a challenging environment, even for the most experienced professional. With its ever-changing financial landscape, competitive markets, and regulatory issues that keep industry professionals on their toes, a relationship with a strong broker-dealer can help weather the storms and provide the tools to alleviate some of those strains from representatives’ shoulders.
Capital is the gasoline that powers the B-D engine. With the onslaught of regulatory exams, litigation and technology investments, never has this been as true as it is today.
According to the Securities Industry Association survey, the rising cost of compliance has affected all firms, large and small. On average, costs over a 4-year period beginning in 2002 have risen by more than 100%. This increased cost must be absorbed by the B-D or passed onto the representatives. Having a strong capital base allows you to have some discretion on how these costs are ultimately allocated.
The cost of technology is escalating and providing state of the art platforms for representatives to grow and manage their business requires that a B-D make a commitment to annual investments in technology. While these investments provide a payback in the later years in terms of increased representative productivity and home office efficiencies, capital is needed to fund the up-front cost of the investments.
In sum, the capital position clearly influences the B-D’s ability to meet the needs of its current and future representatives. Having capital or access to capital will be a key driver in determining your B-D’s ongoing success.
According to Cerulli Associates, superior back-office support and service drives satisfaction in a broker-dealer relationship. If a B-D cannot properly process your business or pay your commissions on a timely basis, then nothing else matters.
The back-office support needs to work seamlessly with your business and its goals. It provides the administrative functions that buttress the “transactional” parts of your business, including business processing, cashiering, asset movements and commissions payments.
As such, a strong, complementary and efficient back-office should provide:
? Updated and innovative technology applications to better manage your business and serve your clients, plus the ability to process your business in a timely fashion.
? A well-trained and professionally staffed trading desk to handle any type or size of order across products.
? A team of operational professionals that views you, the representative, as a client. The professionals should also partner with your firm to understand local administrative workflow to optimize your business process.
Having access to a wide variety of products is critical to meeting your client’s needs. Every B-D has access to largely the same universe of products. What distinguishes the superior B-D is access to people who can help you make sense of those product choices. Ask yourself the following:
? Does my B-D offer the latest products/platforms to help me effectively compete in my market?
? What is the due diligence process my B-D employs to make sure that I won’t ever have to apologize to my clients about a product offered through my B-D?
? Which specialists does my B-D use to make sense of the changing product landscape?
? Is my B-D listening to my needs as a professional?
Localized marketing can also benefit the representatives. Having key individuals that help in the areas of advertising support, sales seminars, client presentations and recruiting assistance serve to further the growth of the individual representative or branch office.
Effectively managing the ever-changing regulatory landscape is crucial to the success of your business. A robust B-D compliance program offers registered representatives those critical tools to achieve the highest standards of business conduct. At the local level, compliance support is an additional bonus to any B-D relationship.
Providing educational materials, implementing better processes and culling a staff of highly trained and knowledgeable compliance professionals is necessary to assist you, the representative, through the day-to-day–some of the many benefits that your B-D should be supplying your business.
The price of all this can be quite high. According to the Securities Industry Association, 94% of all compliance-related spending is staff-related. Yet a reputable broker-dealer is willing to invest not only the capital but also the manpower and expertise to navigate through the plethora of regulatory issues.
In this competitive environment, does your broker-dealer offer your practice those opportunities to evolve, to flex with the changing financial attitudes? As our financial markets evolve, the broker-dealer must remain committed to representatives and offer best practices and business tools to help them grow and manage their business.
Now more than ever, having a key B-D partner is critical to your on-going success. It is important that your broker-dealer provide that strength, support and reputation to help build your business.