The 2015 Broker-Dealer Presidents Poll

Broker-dealer presidents are fierce competitors, and while they may cooperate in areas of advocacy—as they do notably as members of the Financial Services Institute—they all want nearly the same representatives. That’s their real business, after all: recruiting new reps, just as reps’ real business is recruiting new clients.

For five years now, Investment Advisor has solicited independent broker-dealer leaders for their opinions on the challenges facing their firms, and the main challenges facing their reps, in both the shorter term and the longer term.

We present the findings of this year’s survey in the pages that follow, but with five years of data in our hands, we think we can discern a few patterns as well.

Here’s an example: Each year, we asked the presidents which association or organization best represented the IBD industry’s interests, especially in the nation’s capital. In the first few years, FSI was cited first by 80% of respondents, SIFMA and FINRA were in the high single digits and the FPA was even mentioned by 5% of the presidents. This year and last, however, the now 11-year-old FSI is in the high 80% range, while FPA was cited by exactly zero presidents. Other answers have changed over the past five years, and we invite you to visit ThinkAdvisor.com to see additional charts on what has changed in our Broker-Dealer Presidents Poll.

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

Short-Term Broker-Dealer Challenges

Two numbers jump out of this year’s Presidents Poll. Thirty-two percent said that dealing with the evolving Department of Labor fiduciary proposal is the most challenging short-term issue they face; in 2014, the first time we asked the question, only 14% listed it as most challenging.

Not surprisingly, retaining and recruiting reps is the biggest issue facing our IBD presidents, though that percentage has more than doubled—from 21% in our first poll in 2011 to 45% this year—in the five years we’ve asked the question. By contrast, zero presidents named the economy and markets as most challenging, compared to 9% in 2011 and 16% in 2012.

2. What issue do you feel is the most challenging to your firm businesswise in the long term (next three to five years and beyond)?

Long-Term Broker-Dealer Challenges

The same two longer-term business issues for BDs have taken top honors in all five years of the Presidents Poll, but they’ve swapped places. Increased compliance costs was the biggest issue in the 2011 poll—48%—while technology investing was in second place then at 23%. In our 2015 responses, technology and compliance are in a statistical dead heat: 37.7% for both issues.

With industry consolidation picking up, in the last two years we’ve asked if maintaining independence was a top challenge for BD leaders. Apparently not: 9% chose it as a top challenge in 2014, but only 3.3% did so in 2015.

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