Top 10 areas of improvement for broker-dealers
February 1, 2010 by Lisa Shidler
VVV Research and Development Inc. conducted a national survey on behalf of broker-dealer Cambridge Investment Research Inc. In the survey, 648 representatives were surveyed about their experience with their broker-dealers. As part of the survey, advisers listed areas in which they said broker-dealers needed to improve. Here are the top 10:
10. Broker-dealer reliability
Broker-dealers often have internal turnover, which can leave advisers unsure of to whom to turn for help, said Larry Papike, president of Cross-Search, a recruiting firm for independent representatives and executives. “Having a reliable team of people there that reps can count on is important to them,” he said.
9. Basic operations
Advisers want broker-dealers who can complete transactions correctly without mistakes. And if they do make mistakes, they want the firm to correct them quickly, said Kyle Selberg, senior vice president of business development for Cambridge Investment Research.
“Mistakes happen everywhere,” he said. “Where firms can differentiate themselves is if a mistake happens, the broker-dealer can jump in and get the solution and have an effective process for getting things solved quickly.”
8. Imaging capabilities
Advisers are becoming more interested in going paperless, and they want help with process, said Cambridge Investment Research’s Mr. Selberg.
“I’ve been in situations where advisers tell us that they have the equivalent of two- to three-rep offices dedicated to filing cabinets,” he said. “If they can go paperless, they can bring other advisers into their group, and that’s huge for advisers.”
7. Broker-dealer responsiveness
Advisers want a broker-dealer who will answer questions and concerns quickly, said Mitch Vigeveno, founder of Turning Point Inc., a Safety Harbor, Fla.-based recruiting firm. Advisers are annoyed when they don’t feel they’re getting a response in a timely fashion, he said.
“Some broker-dealers have gone to an inquiry-tracking system so that the rep can submit an inquiry about an issue, and it goes into the system and can be tracked by anyone who wants to see where it is in terms of being resolved,” he said.
6. Software applications
Reps often want to go to broker-dealers who have financial planning software they have used before. “They want to be able to put something in the system, and not have to put that information in again,” said Turning Point’s Mr. Vigeveno. “They want labor-saving stuff.”
5. Technology overall
Even though broker-dealers have improved their technology capabilities greatly, there are still some that aren’t providing advisers with the type of resources they’d like, Cross-Search’s Mr. Papike said.
“The problem is, a lot of firms say they’re great on technology but haven’t devoted a lot of resources to it,” he said. “The top 10 broker-dealers have thrown a lot of money into technology.”
4. Technology — ease of
Industry recruiting leaders maintain that when advisers are thinking of making a move to a new firm, they prefer to go somewhere where they know the technology will be easy for them to use.
“Technology is a frequent issue,” Turning Point’s Mr. Vigeveno said. “Technology is a big subject.”
3. Marketing solutions
Advisers want help with marketing and getting new clients, Cambridge Investment Research’s Mr. Selberg said. “In a market downturn, this becomes even more critical to an adviser to help them get their revenue back to where they can make ends meet for their practice,” he said.
The payouts advisers receive is a huge issue, said Cross-Search’s Mr. Papike. But he points out that sometimes advisers get wooed by high payouts and forget there may be hidden costs.
“What they don’t realize is, there’s no free lunch,” he said. “The broker-dealer has to make money or they won’t stay in business. Advisers view this as a really important thing, but when you break it down, I’m guessing the top 10 broker-dealers are all within one or two points.”
1. Transition support
The transition support an adviser receives when he or she goes to a new broker-dealer is extremely important, industry recruiters said, adding that advisers can lose lots of money if the changeover isn’t smooth.
“If there are any glitches, problems, or if the broker-dealer isn’t being responsive or not handling errors, it can totally devastate a broker’s book,” said Cross-Search’s Mr. Papike. “It’s such a critical issue.”