The eight runners up in the 2018 Investment Advisor Broker-Dealer of the Year awards are being honored for their overall excellence in serving their advisors, who rated them extremely high in the latest poll, which had over 1,400 participants.
The BDs being recognized this year as runners up are: Lion Street Financial, Peak Brokerage, The Investment Center, Investacorp, Parkland Securities, Sigma Financial, Next Financial and Questar Capital.
The top executives of these firms have led the rollout of a variety of innovations over the past year or two, and they also have some interesting plans on the horizon for their affiliated advisors. We highlight recent and expected developments below and include each BD’s headcount from our spring Presidents Poll survey.
One of Questar Capital’s priorities in the past year has been the development of new revenue streams that its 640 advisors can tap to grow their businesses, says CEO & President Sherri Du Mond, particularly in investment advisory.
“Many of our reps had S65/66 licenses, but they weren’t necessarily doing investment advisory business,” she explained. “So we put in place tools and programs, along with home office staff, to help support them with investment advisory programs, help them grow assets under management [and] help them grow fee-based businesses.”
In light of the impending (but now vacated) Department of Labor fiduciary rule, Questar worked with its reps to move from upfront to deferred commissions or fees, encouraging reps and advisors to do both both brokerage and investment advisory business, and in some cases fee-based work.
Overall, they encouraged reps to “build multiple revenue streams to make their practice stronger and make their business more predictable,” Du Mond said.
For Barry Knight, president of Next Financial, focusing on technology has been job No. 1 of late. He’s quite proud of how well his “whole organization responded to all the changes in the industry” during the past year.
“Irrespective of DOL or the SEC, we’ve moved toward being more advisor focused, and that [meant] changes for some advisors, like with the platform or systems or supervisory aspects,” he said of Next’s 540 reps. “We’ve mastered those changes.”
Meanwhile, Jennifer Bacarella, executive director of firm development for both Sigma Financial and Parkland Securities (both runners up in their respective size categories), says these BDs also have prioritized technology and the integration of their platforms, so their combined 947 advisors can work better with clients.
Bacarella points out that they have been able to incorporate these shifts without any additional cost to their advisors. “We’ve worked hard in the past three years in designing [our] platform to make sure that [the different technologies] speak to each other, and so advisors have that very smooth, single [log-on] experience and can take care of everything they need for their clients in one place,” she said.
Keeping fees steady also is important to Ralph DeVito, president & CEO of The Investment Center, who says his firm hasn’t raised its fees in 13 years.
“In addition, we have made significant investments in technology, including a new advisor portal,” he says, adding that these costs have not been passed along to its 238 advisors despite the firm’s growth in numbers of reps and AUM, which means increased staff to “ensure that advisors continue to receive the customer service and support that they have been accustomed to.”
Plus, the BD has been taking care of cybersecurity enhancements. “Holding fees steady ensures that our advisors can continue to stay focused on growing their business, and not be distracted by any negative impact on their profitability,” DeVito said.
Investacorp, part of Ladenburg Thalmann Financial Services, is working hard to keep its boutique-firm feel, according to President Patrick Farrell. “Having Ladenburg there is useful, because it allows us to deliver some large firm resources that [we] wouldn’t have been able to provide” otherwise, he said.
Over the past year, Investacorp has been providing retirement plan consulting services and support to its 476 advisors and improving its fee-based advisory solutions — making them DOL compliant. “The changes we made were for the better, so we’ll be keeping those,” Farrell said.
The BD also continues to focus on growing its Next Gen talent pool via multi-generational practices and branch offices, for instance.
For Lion Street Financial President and CEO John Burmeister, the firm has worked to help its 96 “owners” by “increasing their solutions for clients through exposure to new market opportunities supported by our experts and platforms …,” he said. “The culture of our organization is to share their best ideas and practices with other owners for the collective success of the company.”
For example, advisors with specific skills and expertise are encouraged to spread the word, so other Lion Street reps can tap into them to extend special services to longtime or even new clients. At Lion Street’s annual meetings, the BD features reps’ best ideas through five-minute TED-like talks.
In a similar vein, Peak Brokerage Services emphasizes its motto, “Culture is everything.” CEO and President Glen McRary says its platform has portals in which its 54 reps can interact and develop different expertise tied to topics like plan services, Medicare and marketing.
As a firm that was founded by advisors and run by advisors, Peak reps prefer to be collaborative, according to McRary. “I believe you attract what you put out,” he explained. He says top producers don’t mind sharing proven tactics and strategies at the BD’s yearly events, because producers always say they gain something from the people who attend their sessions.”
For Peak, the next two years will be evaluating its systems, reviewing rep-facing technology and internal systems, and finding the “best of breed” technology to embrace, while launching a new website and updating its advisor portal, McRary says.
Technology is also top of mind for for Lion Street, especially in terms of operational efficiency. “Our advisors have been consumed with too much processing and redundant processes,” Burmeister said. “Our focus with our technology partners is to be fully integrated, so the advisor staff does something once and then it’s done.”
Investacorp is planning a new compliant texting solution, Farrell says. In addition, the BD plans offer to conduct “mock” regulatory audits to best prepare its advisors.
The Investment Center’s DeVito also says the firm intends to introduce a text messaging service for its advisors “later this year,” as well as to launch “an online commission system that will provide real-time info to advisors about commissions.”
Continuing to integrate and leverage systems will be a primary focus for Next Financial, Knight says. Advisor coaching, education and marketing are other priorities. “It’s [about] doing more for our advisors to help them achieve and build the practices they want,” and not overemphasize turnkey operations.
Sigma and Parkland want to make sure advisors have strong succession plans. The BD surveyed reps last year to uncover these plans and found out that the majority of them had planned to leave their practices to a non-licensed spouse, Bacarella said.
“They didn’t have a succession plan in place …, but that [type of planning is] something they do every day with clients,” she explained. In response, the firms created its Succession Plus website, which pairs advisors who are thinking about buying and selling their practices.
“We’re trying to expand the conversation,” she said. The BD also aims to create “a next-generation mentality” among reps to help prepare them for retirement and enlist younger partners.
Coaching and mentoring are priorities for Questar as well, says Du Mond. In addition, the BD will continue to educate advisors on its new bells and whistles and to encourage reps to adopt new technology.
“We’re always on the lookout for tools,” she explained. “Because our reps are all independent, [we look at] how can we help them work smarter — not harder and not longer.”