Displaying items by tag: broker dealers

The debate over custodial pricing continues, with many questioning whether bundling all revenue sources into a single fee is fair. Since custodians don’t face significantly higher costs for a $10 million account versus a $100,000 one, a pay-for-services-used model may be more equitable. 

Another pressing issue is the slow adoption of automated onboarding, as many custodians still require paper forms and wet signatures despite available digital alternatives. Some speculate that firms hesitate to streamline transfers because it would make it easier for advisors to switch custodians, reducing client stickiness. 

Beyond pricing and onboarding, factors like service quality, cost, and additional features—such as dedicated support teams or integrated technology—shape custodian selection. 

Finsum: As the industry evolves, understanding these priorities will be key to creating a more efficient and competitive custodial marketplace.

1) Changing broker-dealers involves legal complexities, including contracts, non-compete clauses, and client ownership issues. Consulting an attorney specializing in FINRA and SEC regulations ensures compliance and helps avoid costly mistakes.

2) Losing access to client accounts upon resignation makes preparation critical. A well-structured plan—created at least 90 days in advance—should categorize accounts, assess compatibility with the new firm, and identify opportunities for electronic processing to minimize disruptions.

3) Involving staff early ensures accountability and a smoother transition. Assigning clear roles, setting deadlines, and holding regular check-ins help distribute the workload, preventing last-minute challenges and ensuring a seamless move to the new broker-dealer.

Finsum: Navigating the broker dealer transition can be difficult but these three steps will make the process smooth

RIA custodians play a crucial role in safeguarding the assets of registered investment advisors while maintaining independence to ensure client funds are handled properly. These custodians can be banks, trust companies, or broker-dealers, but all must adhere to regulatory standards that prevent misuse of assets. 

Selecting the right custodian is one of the most significant decisions for an RIA, as it impacts everything from operational efficiency to client trust. 

Key factors to consider include the custodian’s reputation, experience working with firms of similar size and focus, and fee transparency. Additionally, some custodians have minimum asset requirements, which can be a hurdle for smaller firms looking to establish a partnership. 

Finsum: Beyond asset management, a strong custodian should also offer reliable service and support to help RIAs grow and navigate industry challenges.

Advisors nearing retirement often focus solely on finding the right successor, but switching broker-dealers can be a powerful strategy for a smoother transition. Aligning with a forward-thinking broker-dealer can attract a larger pool of potential buyers by offering advanced technology, competitive compensation, and broader recruitment options. 

This move can also position advisors to achieve a higher valuation for their practice, making the transition more financially rewarding. Though it may seem like additional effort late in a career, joining a progressive firm can simplify the process and enhance long-term outcomes. 

Succession planning isn’t just about finding a partner; it’s also about creating the optimal environment for a successful exit. Financial advisors should consider how changing broker-dealers could unlock new opportunities for a rewarding and seamless transition.

Finsum: As we approach one of the largest transition periods in American financial history, consider how your future broker can aid in this transition and provide additional value to your business. 

When financial advisors contemplate switching to a new broker-dealer, the due diligence process typically begins with evaluating compensation structures and the range of available products. However, one critical factor that deserves equal attention is the caliber of the advisors within the prospective broker-dealer. The professional community you join can significantly influence your growth and development.

The collective quality of advisors within a broker-dealer reflects the firm's standards and commitment to excellence. Engaging with a new cohort of professionals presents opportunities to gain fresh insights, foster meaningful professional relationships, and refine business practices. It is a chance to challenge your status quo and infuse new life into your approach by learning from the successes and strategies of others.

Before making a transition, advisors should seek to understand the professional dynamics of the broker-dealer's network. This includes the expertise of the other advisors, the collaborative environment, and the overall knowledge-sharing culture. Evaluating whether the new network encourages continuous learning and improvement can be a decisive factor in ensuring the move aligns with an advisor's long-term goals and values. Thus, joining a broker-dealer with a vibrant and skilled community of advisors is not merely a change in business affiliation; it's a strategic step towards personal and professional enrichment.

Finsum: Researching the caliber of advisors within the broker-dealer you are considering joining can pay greater dividends than you might think.