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Industry Spotlight > Broker Dealers

The 2014 Broker-Dealer Presidents Poll

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Our fifth annual Broker-Dealer Presidents Poll found the leaders of independent broker-dealers are optimistic even though they’re still smarting from the costs of staying compliant. Of the broker-dealers included in the 2014 Broker-Dealer Reference Guide, 58 presidents responded to questions in our poll. They told us about the challenges they’re facing, what they expect is weighing on their reps’ minds, and who in the industry really has their backs.

Click through the following slides to see their responses in graph form.

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

What are the biggest issues for the leaders of independent broker-dealers? Our exclusive poll shows that it’s still all about the reps—recruiting and retaining is by far cited as the biggest issue for the presidents over the next 18 months, which we consider the short term. The Department of Labor’s laborious redefinition of fiduciary is the next biggest single worry for our presidents (the “other” answer is all over the place), which apparently (but not in reality) seems to contradict what they consider their biggest long-term challenge (see answers to Question No. 2).

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)?

“Everyone who’s regulated feels regulation is unfair,” said former Fed Vice Chair Alan Blinder in a May interview with Scott Curtis of Raymond James Financial Services pointed out that in his firm, a DOL fiduciary ruling will have major implications since parent Raymond James Financial counts asset management, underwriting and fixed income as important parts of its non-IBD business. As with all things IBD, each firm has different priorities, though compliance and technology are always near the top of the list.

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

If finding and recruiting reps is job one for broker-dealer presidents, our 58 respondents picked finding new clients as the top short-term challenge for their reps. RJFS’s Curtis linked that answer with the fourth most popular response. “Older advisors tend to have older clients,” who as they age “have to find [new] assets just to break even” on their assets under management. His concern for reps? “Never mind the markets, I still need to grow my book 5% to 10% to keep up with the outflows that we’ve planned for.”

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

Raymond James’ Curtis speaks with passion on the need for reps—and their broker-dealers—to have both “catastrophic” succession plans and more complete ones. “More clients are starting to ask that question of their advisors,” he said. Those end clients “will take things into their own hands and go somewhere else.” That’s a reaction to an advisor’s death or disability that’s “not as healthy as having a plan that says ‘If something happens to me, you’ll be in good hands with this advisor.’” Curtis said RJFS has focused on getting its highest producing advisors to at least draw up and sign one of those catastrophic succession plans; so far 80% “have those documents. These are smart business people,” he said. “They know it’s the prudent thing to do.”

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

The answer to this question is clear-cut: the Financial Services Institute, under Dale Brown’s leadership, has become the voice of independent broker-dealers over the 10 years of its existence, despite a minority of BDs whose business models more clearly align with SIFMA. Not only are many IBDs members of FSI, but they’ve put their money where their advocacy mouths are by subsidizing membership of their reps for at least a year; then it’s FSI’s job to prove the value of reps paying their own membership dues. So far it’s working: FSI now counts 35,000 individual reps as members.

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

As Curtis of Raymond James said, “If I wasn’t optimistic about the business I’m in, I’d be in another business.” Still, this was a poll where anonymity was guaranteed, and in past years some BD presidents answered “No” to the question. This is also a business with notoriously thin profit margins that has experienced serious consolidation over the past year or so. This unanimous response should serve as comfort to the reps of the 58 broker-dealers whose leaders not only say in public that they’re believers in the IBD model, but do so in private as well.


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