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Industry Spotlight > Broker Dealers

The 2013 Broker-Dealer Presidents’ Poll

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Fee compression, regulation, succession planning, technology—the more things change, the more they stay the same for the 58 leaders of independent broker-dealers we questioned exclusively for our annual survey.

Click here for a by-the-numbers comparison of the respondents over the past three years.

1. What issue do you feel is the most challenging to your firm business-wise in the short term (next 18 months)?

We should have asked they be more specific with “other,” although it’s nice that the size of the debt is such a small percentage of broker-dealer concerns. Color us unsurprised that the top concern is “regulatory uncertainty/increased compliance costs.” A new SEC chief, the reintroduction of the DOL’s fiduciary proposal (see Phyllis Borzi’s extended profile from the 2013 IA 25 on, Dodd-Frank’s ongoing implementation, the health care law—it could easily be “death by a thousand cuts.”

2. What issues do you feel are the most challenging to your firm business-wise in the long term (next three to five years and beyond)?

“Dealing with margin squeeze” overwhelmingly took the top spot, but might there be a connection between that and the second biggest challenge, “keeping technology up to date”? Combine the two and you have something. “One of the biggest trends I see in the next 10 years is the interconnectivity of advice and information overall,” Michael Kitces, director of research for Pinnacle Advisory Group and one of this year’s IA 25 honorees, said. Key to that interconnectivity is technology.

3. What issues do you feel are the most challenging to individual reps in the short term (next 18 months)?

We’re a bit confused by the results of this one. “Finding the best new clients” wouldn’t be much of a concern, we surmised, with the stratospheric rise in the market. But further reflection had us take note of that key word—best—which we would agree, yes, is an ongoing challenge. What, you wouldn’t want your reps to have lovely retired couples who call every day, ignore their advice and attempt to time the market?

4. What issues do you feel are the most challenging to individual reps over the long term (next three to five years and beyond)?

Building sustainable retirement plans for themselves and their clients certainly fits with all we hear at industry events. Succession planning is the topic everyone is talking about, but sadly, few are acting on it. Maybe it’s simple procrastination or the more complicated emotions of letting go of a business they’ve spent a lifetime building. Whatever the case may be, reps aren’t taking their own retirement into account, despite the active encouragement of almost every broker-dealer leader who answered our poll.

5. Which industry association/entity do you feel is most essential to advancing your point of view, especially in Washington, D.C.?

We realize we could be accused of “gilding the lily” on this one, but hear us out. The overwhelming response of the admittedly biased respondents still fits with the advocacy wins FSI has recently experienced (witness the defeat of Florida’s notice-filing legislations and its implications for other states). Combined with its steadily increasing numbers and the excitement we witnessed firsthand at the annual OneVoice conference in January, and there is some “there” there.

6. Are you confident that the independent broker-dealer model will remain viable?

We’d really like to talk more with representatives of the naysayers. While the industry does face significant headwinds, each challenge would appear to offer a corresponding opportunity, which is how most executives who responded to the poll described it. Fully 76 million members of Gen Y will follow closely on the heels of 78 million baby boomers, and the former is far more independent-minded than the latter. Handled right, things can only get better.