Over the last five years,” says Norman Malo, president and CEO of National Financial, the big clearing arm of Fidelity Investments, “the evolution,” of the relationship between clearing brokers and their correspondent broker/dealers has been dramatic. Clearing firms like National Financial were in the past required to steer clear of correspondent B/D’s reps, Malo explains, but now they are being asked to “‘please help me recruit, and train, and share product information with my brokers,’” Malo explains over an October 17 breakfast in New York with a handful of journalists.
In the 2007 National Financial State of the Broker/Dealer Industry Study, conducted in May and June across the industry, not only with National Financial clients, but with participants that differed by size and type of firm, including independent B/Ds, wirehouses, institutional firms, and discounters, National Financial found that, not surprisingly, growth of the firm’s business was the number one priority. Survey results showed that the favored strategy B/Ds use to grow the firm was “hiring brokers and advisors,” which was a number-one or -two priority for a hefty 56% of broker/dealers. “Retaining high value producers” is also very high on the broker/dealer agenda, with 45% responding that this was a number-two or -one priority in their strategy for growing the firm’s business.
To help their correspondents achieve these business goals, National Financial is launching two new initiatives to support these broker/dealers in their efforts to recruit and develop representatives. The National Financial Broker/Dealer Recruiting Program will give B/Ds “turnkey, and simple to implement” recruiting support, according to Sandra Metraux, executive VP of marketing for National Financial. The program offers, for free, “marketing collateral” materials customized with a correspondent B/D’s name and logo; “access to health benefits,” through an agreement with a third-party healthcare provider named BenefitProtect–of course, premiums themselves must be paid by the rep if the rep is independent; “transition support” guidance; and “training” with online and CD tours, and tutorials about the National Financial Streetscape workstation.
Another program, the National Financial Broker and Advisor Development Program, provides “awareness” tools, such as “seven different emails, to make reps aware,” Metraux continues, of programs like Fidelity Managed Accounts Solutions, launched last year, and the just-launched Retirement Income Planning Program. “Training and education” are also part of the program, she says, with live “instructor-led, Web based” training that reps can attend virtually, or online demos and instruction that’s available via the Web all the time, so reps can sign on and get the training whenever it’s most convenient for them. Finally, there are “business building tools” to help reps build their businesses with sales and marketing ideas.
Part of the reason that B/Ds want clearing firms to help them support their reps, Malo points out, is that because so few young people are coming into the business as reps, firms are competing for the existing pool of talent to help gather some of the $20 trillion in assets that investors have accumulated for retirement–money that will need to be put to work providing income or cash flow for what many experts expect to be a longer, more active retirement. Fewer reps means that firms are competing for the ones that are currently in the business, and B/Ds are also looking to leverage technologies that will make their business grow, their reps more effective, better trained, and well supported–and therefore more likely to stay with the firm. “They trust us to do this–we’re not there to take their brokers–we’re here to help them,” Metraux notes.