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Industry Spotlight > Broker Dealers

Coming Out Party

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Only fours years after its inception, the Financial Services Institute has achieved a high level of success as the primary advocacy group for independent broker/dealers. At its One Voice: 2008 national conference in Orlando in late January, FSI CEO Dale Brown ticked off some numerical evidence of the group’s success: 564 attendees for the meeting, the most ever, and 12,600 financial advisors as members hailing from 114 member B/Ds. In 2008, Brown said the FSI will focus on fighting for retention of 12b-1 fees, clarifying regulation S-P, defending the tax and employment status of B/D independent contractor reps, and educating regulators and legislators about the independent advice model. The new chairman of the FSI, Brian Murphy, who is chairman of Woodbury Financial Services, and executive VP of the Individual Life Division at Hartford Life, presented an award to his outspoken predecessor, ING Advisors Network CEO John Simmers who, he joked, “must take performance enhancers for candor.” Echoing what is clearly a major 2008 talking point for the FSI, Murphy said the Institute exists “so advisors can provide advice to all Americans, not just the affluent.” He trumpeted the group’s success in making the independent B/D model a force to be reckoned with in Washington, noting that FINRA staff have told him that FSI has developed a “strong, positive reputation, and that they (don’t institute rulemakings without considering the impact on FSI.” In a warning to FINRA’s approach, Murphy also stated baldly that “we can’t let rules-based enforcement trump principles-based enforcement.”

In an interesting panel with the leaders of different-sized B/Ds facilitated by keynote speaker Joe Calloway, Eric Schwartz of Cambridge Investment Research spoke to the challenge of differentiation facing independent B/Ds by arguing that “a great brand must repel as much as it attracts,” while Larry Roth, CEO of AIG Advisor Group, worried that “we don’t pay enough attention to younger people and smaller advisors” within the rep force. Wade Wilkinson, CEO of Securities Service Network, warmed to the notion raised by Murphy. “As independents,” Wilkinson argued, “our past and future is middle America. I worry that we may be abandoning middle America.”

The environment in which narrow-margined independent broker/dealers operate is anything but simple, notes Norm Malo, president and CEO of National Financial, the Fidelity clearing arm. Ten years ago, he says most B/Ds would say “I own the broker,” but the top request Malo hears these days from his correspondent broker/dealers is “help me train my brokers,” and “help us recruit.”

The leaders of FSI’s member B/Ds face similar challenges. Randall Ciccati, president of ING Advisors Network, said that “my business grows automatically if I deliver the right tools to reps, who will grow their businesses exponentially.”

At American Portfolios Financial Services, where “we’re in the business of communications,” President Frank Tauches has grown the B/D’s rep force by nearly a third in 2008, adding 135 brokers to approach the 500-rep mark. Those recruits “appreciate the stability” of management and American Portfolios’ home grown and acquired technology. As for the current volatile market environment, Tauches returns to the communications issue: “You don’t lose clients when the market goes down, but when clients don’t feel their advisor is with them.”


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