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Industry Spotlight > Broker Dealers

Revolutionizing Advice, Pt. 2: Transforming the BD Advisor

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In part one of this series of posts I suggested that the traditional broker-dealer business model is undergoing a significant evolution. This phenomenon is driven by a new wave of investors known as “Validators,” or individuals who both desire the expertise of an advisor and want to maintain control of their own financial accounts using online technology.  

I asked broker-dealers to consider embracing this trend and proposed that to do so, they may want to revisit the current advisor model and supplement or even replace it with an “Advisor 2.0” model appropriate for their business model.

In part two below, I focus on how broker-dealers may be able to help their advisors to more effectively meet this opportunity. 

Reorienting your advisor’s focus may serve as the key to enabling Advisor 2.0, and it’s a challenging task. With the number of advisors projected to drop to 312,000 by 2015 (representing an 8% decline in advisor population for the period 2004-2015) (see Cerulli Quantitative Update: Advisor Metrics 2011), everyone is fighting for a smaller piece of the pie. Like the investors they serve, advisors are aging – half are 50 or older (Cerulli Quantitative Update: Advisor Metrics 2011). Advisors are also becoming more independent-minded: From our experience we’ve learned their demands include the freedom to sell a variety of nonproprietary products, higher payouts, and the opportunity to build equity in a business and work in a culture with like-minded individuals.

Historically, advisors have generally been a rather homogenous group of solo practitioners who may have seen themselves primarily as stock pickers. They spent a lot of time meeting with clients in person and over the phone, and may not have embraced technology as a way to work with their clients.

Tomorrow’s Advisor 2.0 looks markedly different. Fidelity research (Fidelity Broker Advisor Sentiment Index, March 2012) suggests she is increasingly likely to be female, younger, culturally diverse, and part of a team of complementary advisors who share a practice. She embraces technology – not only to transact business and service clients efficiently, but also to communicate and build client relationships. She is much less focused on stock-picking than her predecessors (she lets her managed account products carry a lot of that load for her), and more focused on spending more time with clients.

Five Steps to Transform Your BD Advisors’ Role

What can broker-dealers do to potentially transform the role of the advisors in their firms? 

  1. Consider selecting advisors who more closely fit your value proposition.
  2. Consider the demographic makeup of your advisor force and how well it mirrors that of your target population. Generations X&Y now comprise over half the total population in the U.S ( ICI, 2010).and there has been a dramatic increase in the earning power of women (Financial Services:  The Industry Women Love to hate,”, March 18, 2011 ). Are your advisors successfully engaging these critical demographic groups, and if they aren’t, what is your plan to help them do so?
  3. Bear in mind the potential benefits of harnessing the multiplier effect of teaming in your organization.
    National Financial’s Broker & Advisor Sentiment research, published in October 2012, indicates that teamed advisors were considerably more successful than their soloist peers, reporting earning 32% more as individuals. Teams seem to work because individual members can focus on different aspects of the client experience and provide better and more specialized services. Teaming may also help support contingency and succession planning.
  4. Consider that successful advisors appear more open to segmenting their clients and prospects. Not all clients are created equal – some are a significantly better fit for your value proposition and have much higher potential for profitability and growth. Advisors must make choices about where to focus their resources – a simple idea in theory, but difficult to put into practice.
  5. And lastly, think about how you can help your advisors more fully embrace technology, especially new channels of communication to engage with clients and prospects, and online consumer portals that allow investors to “visit their money.” Tech-savvy advisors participating in our research ( Fidelity Broker Advisor Sentiment Index, March 2012) reported being able to spend more time with clients and focus more on value added services instead of basic issues. 

BDs Who Have Embraced 2.0

As mentioned in the first part of this series of posts, some National Financial clients are already successfully pursuing Advisor 2.0 strategies. 

  • Commonwealth Financial Network has built a very strong value proposition and focuses on recruiting brokers who are a good organizational and cultural fit.
  • When First Tennessee set out to increase the size of its advisor force, it focused on advisors with successful practices. They found that Teaming new hires with veterans who had more expertise on various topics gave recruits the opportunity to generate incremental revenue and increase client satisfaction.
  • Securities America has developed a holistic program, NextPhase, to help its advisors become their communities’ retirement income planning experts.
  • SunTrust has started to place more emphasis on female advisors, forming a Women’s Advisors Program and initiating a conference specifically for them. They may be embracing recent research ( Fidelity Broker Advisor Sentiment Index, March 2012) that suggests that, in general, female advisors think and market differently than men, and they report that some of the best new thinking for the broker-dealer is coming from its women’s program.
  • Cambridge Investment Research has created a Cambridge New Century Advisory Council to identify the next generation of advisors and determine the offerings they will need, how they will communicate, and what they will expect from their broker-dealer partner.Cambridge expects this next generation of advisors to help it meet the needs of Gen X and Y investors. 

To say that current economic and market conditions are challenging would be an understatement.Europe, market volatility, record-low interest rates—it’s anybody’s guess what lies ahead. The broker-dealers that are most likely to survive—and thrive—in a challenging environment are those that commit to making the changes these times demand. 

Advisor 2.0 may be a good place to start. 


The information presented above reflects the opinions of author and do not necessarily represent the views of Fidelity or any other person in the Fidelity organization, and are subject to change at any time. 

Commonwealth Financial Network, First Tennessee, Securities America, Sun Trust, and Cambridge Investments are clients of National Financial.

National Financial Services LLC, Member NYSE, SIPC.



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