JERSEY CITY, N.J., Aug. 24, 2015 /PRNewswire/ -- To remain
competitive in today's financial advice industry, broker-dealers
must recalibrate their relationships with their advisors, according
to a whitepaper released today by Pershing LLC, a BNY Mellon
company. The report, Why Teams Are the Client of the Future for
Broker-Dealers, points out that changes in the advisor-client
of the modern broker-dealer present different challenges and
opportunities that broker-dealers must navigate. These changes
provide broker-dealers with an opportunity to rethink their overall
strategies to attract and retain top clients.
According to the report, the top client of today's successful
broker-dealer is not a "rep" or even an "advisor" but an ensemble,
which is a firm or a team of multiple professionals that service
and manage client relationships. Ensemble teams are already
controlling a significant percentage of broker-dealer revenue,
growing faster than the average practice, servicing a
higher-net-worth client base and offering better career growth
opportunities. Most importantly, ensembles are net acquirers. They
are acting as a successor for many of the smaller solo practices
and are likely to emerge as the ultimate consolidators of the
industry.
"Broker-dealers have formed traditional affiliation models
around individuals, which don't necessarily work as well for
ensemble firms," said Jim Crowley,
chief relationship officer and managing director at Pershing.
"However, broker-dealers that recognize and understand that their
top client is a team rather than an individual will not only
strengthen existing relationships with these clients, but will also
position themselves for organic growth and strategic
acquisitions."
While ensembles are valuable to broker-dealers, they are also at
risk of being lost as clients. Many larger teams are departing
broker-dealer firms to become independent. These advisors, known as
breakaway advisors, are moving to a registered investment advisor
(RIA) or hybrid business model. Industry changes continue to
increase the possibility that successful teams will part ways with
broker-dealers.
Despite the challenges, broker-dealers can successfully recruit,
retain, and work with ensembles by better understanding how they
work and by restructuring affiliation models. Pershing's report
highlights actionable ways for broker-dealers to accomplish this,
including:
- Restructure relationship management: Broker-dealers
should maintain a relationship with multiple individuals within the
ensemble team, including the CEO/managing partner/leader,
COO/operations leader, advisors and next generation of
successors.
- Focus on holistic financial advice: Since more than 70
percent of a large advisory firm's revenue comes from advisory
fees, broker-dealers should seek to reframe the relationship with
the firm as one of offering a spectrum of financial advice and
serving in a more custodial capacity to demonstrate the greatest
value to the advisory team. This includes understanding the
investment philosophy of the ensemble team, knowing the tools
advisors need to run their business efficiently, integrating
technologies and support, offering holistic planning, and building
confidence and trust through open communication.
- Understand the ensemble team's vision and business
strategy: To be a good business partner, broker-dealers need to
ask advisors about where they envision the future of the ensemble
team in five to 10 years. Ideally, the vision should be one where
there is collaboration with the broker-dealer at some level. The
more the two firms work on the strategy together, the longer and
stronger the relationship will be.
- Think in terms of outsourcing: One of the most
productive avenues for strategic partnership is outsourcing.
Activities that advisors can outsource to their broker-dealer
include: compliance, technology, due diligence, back-office
operations and practice management.
- Give ensemble teams examples of success and thought
leadership that they can study and replicate: One of the
primary reasons advisory firms leave broker-dealers and become RIAs
is that they perceive it to be the path followed by large and
successful businesses. To be successful, broker-dealers need to
create examples of the collective intellectual capital that can be
leveraged to demonstrate expertise and show value to
investors.
- Create and foster a culture: If the broker-dealer and
advisory firm share the same values and goals, the relationship
will be strong, durable and successful. To continue to foster that
culture, broker-dealers need to regularly come together with
advisors in a constructive dialogue about their business strategies
and expectations of each other.
To obtain a copy of Pershing's whitepaper Why Teams Are the
Client of the Future for Broker-Dealers, please visit
www.pershing.com/ourthinking.
About Pershing
Pershing and its affiliates provide global financial business
solutions to advisors, asset managers, broker-dealers, family
offices, registered investment advisor firms and wealth managers. A
financial services firm located in 23 offices worldwide, Pershing
provides business-to-business solutions to clients representing 6
million active investor accounts on the U.S. platform. Pershing
affiliates are members of every major U.S. securities exchange, and
its international affiliates are members of the Deutsche Borse,
Australian Stock Exchange, Irish Stock Exchange, London Stock
Exchange and Toronto Stock Exchange. Pershing LLC (member
FINRA/NYSE/SIPC) is a BNY Mellon company. Additional information is
available on pershing.com, or follow us on Twitter @Pershing.
About BNY Mellon
BNY Mellon is a global investments company dedicated to helping its
clients manage and service their financial assets throughout the
investment lifecycle. Whether providing financial services for
institutions, corporations or individual investors, BNY Mellon
delivers informed investment management and investment services in
35 countries and more than 100 markets. As of June 30, 2015, BNY Mellon had $28.6 trillion in assets under custody and/or
administration, and $1.7 trillion in
assets under management. BNY Mellon can act as a single point of
contact for clients looking to create, trade, hold, manage,
service, distribute or restructure investments. BNY Mellon is the
corporate brand of The Bank of New York Mellon Corporation (NYSE:
BK). Additional information is available on www.bnymellon.com.
Follow us on Twitter @BNYMellon or visit our newsroom at
www.bnymellon.com/newsroom for the latest company news.
Contact:
Cassandra Osei
+1
201 413 3394
cassandra.osei@pershing.com
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SOURCE BNY Mellon