Questions to Consider When Choosing a Potential Broker-Dealer

We’ll help you look before you leap

The switch to an independent broker-dealer can be financially and personally rewarding, if you choose the right firm for you. We leverage our due diligence on the entire independent broker-dealer community to help identify the right firm for you. Our due diligence gives us competitive intelligence and deep insight into the differences in independent broker-dealer cultures, product mixes, technology, services, back office support, clearing platforms, pay structures, compliance environments, etc. Here are just a few of the many questions to ask of a new brokerage firm before you make a move.

ANALYSIS

  • How long has the brokerage firm been in business?
  • What is the firm’s gross revenue?
  • How many reps?
  • How many employees are in the back office for support?
  • Calculate staff-to-rep ratio
  • What is the level of experience in the back office?
  • What is the excess net capital of the firm?
  • Is the broker-dealer registered in all states where you plan to do business?
  • What is the firm’s coverage for errors and omissions insurance and does it include fraud allegation?
  • What are the long-term plans of the broker-dealer?
  • What are the requirements for becoming an office of supervisory jurisdiction (OSJ)?
  • Can you recruit other representatives and receive an override on the business they place, if you serve as their OSJ?
  • Is the firm a registered investment advisor (RIA)?
  • Can you transact business under their RIA or your own?
  • What is the firm’s product mix? Does it align with your current product mix or what you intend to focus on?

TECHNOLOGY

  • What forms of technology does the brokerage firm use?
  • What is the process for learning how to use it?
  • What access will you have to your client accounts?
  • How do you enter trades?
  • What type of access will you have to traders?
  • What type of accessibility will you have for stock quotes, research or news?

PRODUCTS

  • What mutual funds, variable annuities, and variable life insurance products are on the brokerage firm’s approved list?
  • Can packaged products be networked on one statement?
  • What marketing materials are supplied by the broker-dealer?
  • Can you see a sample of a client statement?
  • Will your name appear on the statement?
  • Will you have access to cash management accounts, to provide your clients a debit card and check-writing privileges?
  • Are there any monthly costs associated with the broker-dealer that will affect your payout?
  • What are the ticket charges at the new broker-dealer?
  • Comparing your current production run, what would you net if you did those same transactions with the new broker-dealer?

SERVICE

  • What marketing support does the broker-dealer provide?
  • What is the transition process?
  • What type of support is offered through the transition process?