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Industry Spotlight > Broker Dealers

Leading the Way

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The representatives of independent broker/dealers are fiercely independent people who utterly reject the drawbacks (and benefits) of the wirehouse employee broker model. As independent reps, they want to run their practices their own way, develop their unique business models, and mine their personal client niches to match their needs while providing top-notch service to their clients. Their business acumen has increased by necessity over the years, sharpened by competitive pressures and rising expenses prompted, especially over the last few years, by what they perceive as sometimes clueless regulatory and compliance pronouncements promulgated at the federal and state levels and by SROs. These reps feel some satisfaction at the success they’ve enjoyed over the years, and are optimistic about their future despite the competition, rising costs, and margin pressure. They willingly join with key partners who are necessary to run their businesses, but they keep a close watch on those partners, making sure they provide the products and services reps need, at a good price, without cramping their independent style and growing businesses.

In other words, successful independent B/D reps are much like the people who run the successful broker/dealers with which they affiliate, people like the leaders of the 2007 Broker/Dealers of the Year.

Eric Schwartz of Cambridge Investment Research, Eric Meyers of Capital Financial Group/H. Beck, Christopher Ranney of Brecek & Young Advisors, and Nick Sondel of Harbour Investments have different backgrounds and education, run different-sized broker/dealers, rely on different revenue sources, are even headquartered in different parts of the country. Yet in a wide-ranging joint interview that lasted for the better part of a sultry August afternoon in Chicago on August 7, these four men displayed common concerns–especially when it came to compliance issues, with each voicing frustration with the current regulatory structure and support for one super-regulator. They also displayed a shared passion for the business and the independent B/D model. They spoke similarly about the familial corporate cultures they try to foster, and about the kinds of reps they want to first attract and then retain over time.

The IA editorial staff will be picking these leaders’ brains from time to time throughout the coming year and sharing those ratiocinations in articles in the magazine and in podcasts on the Web while the four men serve a term as the Investment Advisor Broker/Dealer Advisory Board. Their very diversity, which can be measured in more ways than just their differing sizes, and the high esteem in which their reps hold them qualify these gentlemen for that position.

While taking some satisfaction from being named Broker/Dealers of the Year, having gained the highest average rating in their respective divisions from at least 10% of their producing reps in the 17th annual balloting that took place online at (see “How You Picked Them” sidebar), they’re also acutely aware that reps are always asking what their broker/dealers have done for them lately.

Despite the fact that all four have been in business since around the dawn of the independent B/D age, two of the four are first-time winners (Harbour Investments in Division I and Capital Financial Group/H.Beck in Division III); and another won only once before this year (Cambridge Investment Research won Division III in 2003; it won in the largest division this year, Division IV). The final firm in 2007′s ring of honor is now a five-time winner: Brecek & Young won Division II this year; it had a three-year-in-a-row run from 1999-2001, and returned to the winner’s circle in 2005.

Knowing the orneriness of independent B/D reps, and their tendency to resist when told how to say, think, or do anything, the winning Broker/Dealers can feel great satisfaction in their achievement this year. So how do they get those high marks? It starts with turnout. First, they need to reach a threshold of getting that minimum of 10% of their producing reps to cast a valid vote to get into the final round. Second, since reps who vote tend to give their B/Ds high marks, those B/Ds that are successful in getting their reps to vote tend to score well. Third, they do need to listen to the needs of their reps and respond to them in order to keep them satisfied. Nothing is more important to reps than feeling like they’re valued members of a team, or in the words of the winning broker/dealers, part of a family that treats all its members with respect.

Please continue reading for complete coverage of the Broker/Dealer of the Year roundtable.


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