As part of this, our annual exploration of the independent broker/dealer universe, Investment Advisor polled the presidents of the independent B/Ds participating in our annual broker/dealer survey, asking them to disclose the daily challenges their firms face, and rate a series of issues based on their importance to their businesses and their advisors.
For the 58 leaders of the broker/dealers who graciously took the time to answer our Presidents’ Poll, the consensus most challenging issue over the next 18 months will likely be a “misguided regulatory/legislative agenda.” Over 70% of respondents selected this as the biggest potential problem for their firms.
In the same vein, nearly 37% felt that a higher-tax/greater-compliance atmosphere would continue to challenge them over the next three to five years and beyond. With the Obama Administration focused on policing past abuses and looking for legislation to enforce new rules, that’s not a spurious concern.
When asked what they considered the most important issue facing the independent B/D industry itself, almost 40% cited regulation in one way or another. An additional group mentioned its corollary, compliance. We offered confidentiality to all our respondents, which perhaps gave one president the freedom to cite Washington’s “socialist agenda” as the top worry for the industry.
As an outgrowth of the regulatory issue, when asked about the most challenging issues for individual advisors over the short term, over 30% of the presidents cited “Rebuilding trust with current clients.” Interestingly, nearly as many (over 29%) said that the most important issue facing the investing public was trust of the industry and/or the advisor.
Yet less than 7% felt that was the most important issue facing the industry. Slightly more, 9%, considered regular/increased client communication as the single most important change made in the home office. And just over 10% plan to invest more money and effort in client communications.
Who Speaks for Them?
Speaking of trust, there’s also a massive disconnect between independent B/Ds and FINRA, which was felt by only 9% of respondents to be best poised to advance their point of view to legislators in the nation’s capital. The presidents’ top choice for that post was FSI, the Financial Services Institute.