Just in time for this Broker/Dealer Special Report, Investment Advisor convened a conference call in May with the IA Broker/Dealer Advisory Board, composed of the executives who run the four independent firms that were elected by their reps as the 2006 IA Broker/Dealers of the Year. This year’s board includes Brian Murphy, president and CEO of Woodbury Financial; Barry Knight, president of NEXT Financial; Ralph DeVito, president of The Investment Center; and Scott Yamamura, group president of Contemporary Financial Solutions. These leaders shared their thoughts on a number of issues that B/Ds are dealing with.
Pressure on margins seems is always an issue for broker/dealers. At Woodbury, Murphy stresses “annual vigilance” in reviewing arrangements with product providers, with a view to the changes in selling patterns of reps. In addition, Murphy divides firm expenses into three layers: core functions that are essential to the business, made as “efficient and effective” as possible; expenses for items that differentiate the B/D and may “delight” reps, where money could be considered well spent; and then a third layer, extras which are nice, but not essential–less is spent on those.
At The Investment Center, DeVito ties keeping an eye on margins with recruiting by “making sure that the reps that we recruit now are within the right product mix, that it fits within the framework that we have set up for them, so that we’re not adding a lot of different expenses.”