Four Things Reps Often Overlook When Changing BDs

Cultural Fit. Each independent broker-dealer has its own culture and personality; just how happy you’ll truly be with your new firm depends on how well your personalities and styles match. For example, a larger firm may be more financially stable and provide more access to products and services, yet may not provide the same of level of personalized service you’d receive at a smaller firm. A smaller firm may be less financially stable, but you’ll be more likely to speak with individuals who will get to know you by your name rather than your ID number and to have direct access to decision makers.

E&O Insurance. E&O policies are complex. While the costs of different policies vary, cost is not an indication of the quality or extent of coverage you’ll receive. Too many advisors are short sighted in looking only at policy cost and not at actual coverage. For example, some E&O insurance policies don’t include “prior acts” coverage, leaving you uncovered for anything that happened before you switched broker-dealers, even if you had coverage at your former BD. Should you be faced with arbitration, some broker-dealers’ coverage requires you pay their deductible in addition to your own, and many policies limit coverage to specific products.

Advisors who carefully consider and investigate these often overlooked factors can create a long-lasting, gratifying situation for themselves at a new firm. Choosing a new broker-dealer is a major career decision that begs careful investigation in order to make sure your next move is beneficial for you and your business.