Financial advisors are quick to call theirs a people-to-people business; and since they’re out on the front lines, that’s completely correct.
But now some traditionally backstage participants in financial services are earning the right to call their enterprises fairly people-oriented too: clearing firms. Over the last decade, they have evolved from back-office workhorses to key players in helping broker-dealers grow. The people with whom they’re initiating more direct contact? Advisors themselves.
Whether through face-to-face group meetings, workshops, training sessions, presentations at big broker-dealer conferences or via Internet webinars, clearing firms are reaching out to FAs to build stickier relationships with their correspondent clients.
National Financial, for example, a unit of Fidelity Investments, with 340-plus clearing clients, talks with advisors about new products and capabilities at client conferences and interfaces with select groups of FAs about its platform at both its own Boston headquarters and on correspondents’ premises.
Through National’s webinars featuring industry experts, advisors can also chime into discussions about timely issues such as risk and regulation. Plus, once a year the firm hosts clients and advisors in a wide-ranging discussion of clearing and broad investment issues.
“There’s more of all that. It’s changed a lot over the last year-and-a-half. There’s more openness with our clients in having these direct connections than ever before,” says Anne Steer, executive vice president-relationship management at National Financial. “If somebody thinks of us as [just] a ‘vendor,’ I feel that we’ve failed. We are absolutely a partner with our clients.”
The largest clearing firm, Pershing, an affiliate of The Bank of New York Mellon, with 1,100 clients, is making more direct contact with advisors, too — particularly in the education and training area. Jim Crowley, managing director, says that Pershing, based in Jersey City, N.J., has developed “a whole new core competency” by partnering with third parties to create leadership papers and a seminar series for FAs, among other aids.
Such advisor-orientation is just as evident at some smaller-sized clearing companies too. Raymond James & Associates, with 42 clients and growing, has what it’s dubbed “Fireside Chats,” in which members of the parent company’s wholesaler staff sit with producers and clients to strategize on how to best use products and desk-top modeling software to help meet goals.
“All our solutions are built with the financial advisor in mind,” says Robb Combs, director of correspondent services, in St. Petersburg, Fla. “We’re developing solutions around our clients’ business plans and actively participating in their businesses.”
The thrust to address FAs directly has been evident during this extended period of market volatility.
LPL Financial’s Custom Clearing Services, which last August converted its first client, AXA Equitable Life Insurance Co.’s AXA Advisors, provides these 4,500 producers with full access to its research group — the same one LPL independent FAs use. Further, a customized Web page for use by all the advisors serves up hotline tips and information, such as the meaning of interest-rate changes, throughout the day.
“We’re getting heavy traffic on that,” says Jon Eaton, managing director of LPL’s Custom Clearing Services, in San Diego.
Raymond James makes available daily a staff of economists, market strategists and a research team that covers market sectors and about 700 different securities. Their input is accessed via conference calls, printed materials or through the firm’s research liaison call desk.
During wild market swings, Wachovia’s First Clearing Correspondent Service, with 125 clients, counts on the firm’s Envision system, which helps identify life goals, to enable FAs to shift client focus from market indexes to investment objectives.
“The discussion goes from, ‘Oh my God, the market is down 4 percent!’ to ‘Am I on track?’” notes William Coppel, First Clearing’s senior vice president. “It’s a very different conversation from ‘How am I doing against an index?’ Advisors are actually going out and initiating conversations on tough days when the market is getting hammered, holding clients’ hands and saying, ‘You’re OK.’”
Going one-on-one with advisors, First Clearing holds workshops and panels that address critical practice management issues. This May and August, for instance, it will conduct two client loyalty-building workshops with experts providing insight into, among other areas, gathering the additional assets of existing clients.
Understand Your ClientWith retirement investing demanding major industry attention, First Clearing is supplying FAs with practical help on, for example, how to address the distinct issues that arise in meetings with aging clients. It has delved into such matters as the elderly’s hearing loss and the need to provide close-by parking to advisors’ offices.
“It’s how to take care of [things] like that when it comes to understanding your client,” says Atul Kamra, president of First Clearing. Instead of just “Know your client” the firm is emphasizing to advisors, “Understand your client.”
“Knowing your client is about how big their portfolio is and what their investment objectives are. Understanding your client is understanding their life, their family, their special situations. This,” says Kamra, “is the heart of what we do.”
Recruiting is another area where clearing firms are helping BDs by striving for face-time with FAs. National Financial, for one, often meets with advisor candidates in which its broker-dealers are expressing strong interest. Once an FA joins a firm, National immediately supplies 90 days’ training on their clearing platform.
“We’re focusing on this even more,” says Steer, “because our clients are asking us to.”
Whether employing direct advisor contact or other tacks, the overarching mission for clearing firms today is how to help BDs differentiate themselves in the marketplace, expand their businesses and boost their efficiency.
Helping its correspondent firms to grow is No. 1 at Penson Financial Services, a Penson Worldwide subsidiary, which itself has grown to serving 250 clearing clients since its 1995 launch.
“But we continue to try to maintain a small-business mentality,” says Dan Weingarten, senior vice president-sales and marketing. “We have [quite] a history of taking small start-up ideas and partnering with these firms, and watching their businesses expand.”