Leadership

In the middle of one of the most challenging times in the industry’s history, how are independent broker/dealers coping? The leaders of 67 of the firms in our 16th annual Broker/Dealer Directory took the time to share their insights, hopes, and dreams in our third annual Presidents’ Poll, and as you might expect, they expressed the optimism that leaders often exhibit, while sharing the practical steps they’ve taken to help their firms–and their reps–to not only survive, but thrive in this new world. (Some of the poll takers were in fact presidents of their firms, others were CEOs or other top executives delegated to the task.)

The most telling responses, and perhaps the most surprising, came in a question about the fiduciary standard: 87% of the respondents said they expected such an RIA-like standard to be imposed on their representatives, which if it occurs would mark a sea-change in the independent B/D world and provide significant benefits to clients, not least to clear up confusion among consumers as to whom a rep represents. Another significant response came in the most-frequently cited short-term challenge for representatives, which might be called the Bernie Madoff effect: 71% picked “rebuilding trust with clients shaken by a poor-performing market and fraud.”

When asked about the biggest short-term challenge, 37% of the leaders of the 67 firms named the volatility of the markets, followed closely by a consequence of that volatility–31% cited as their biggest challenge reduced revenue as assets under management have shrunk.

In accompanying comments (while each signed their individual poll, to encourage candor we guaranteed anonymity), one leader wrote that the most important issue facing the investing public was “regaining confidence not only in investments but in institutions designed to protect them and provide unbiased information,” such as FINRA, the SEC, and the ratings agencies. Another president brought it closer to home, saying the biggest issue was “Reassuring clients that the financial industry is stable and solvent and their financial professionals are doing everything they can to assist them in preservation of capital and/or wealth building.”

That first president quoted above voiced a common answer to the question of the single most important issue facing independent broker/dealers: “Surviving substantially reduced margins and diminished sources of colatteral income, such as revenue sharing and interest on money market funds and cash balances.”

Next Stop, Tomorrow