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Broker Dealer Consolidation

How will it affect you?

Broker dealer consolidation is at an all-time high, and we expect six to eight more firms to be consumed by larger entities this year. If you are with a broker dealer that is being acquired, or that you expect might be acquired in the near future, you need to be prepared. In my next article in Investment News, we explore just what you need to do if an acquisition is in your future.

If your broker dealer is acquired, the intentions of the acquiring firm – whether they plan to leave your firm as a standalone or roll it up into a larger entity – will determine how quickly you need to act in doing your due diligence. Even if the acquirer announces a plan to leave your firm as a standalone, history has shown that plans can change quickly. In our experience, the most successful acquisitions are those in which the acquiring firm takes the time to determine the needs of its new advisors before making any changes. When an acquiring firm makes quick changes, it’s typically a sign that the firms culture may go south. If the acquirer plans to roll up your broker dealer from day one, it may be time for you to do some due diligence right away.

You also will need to identify what’s important to you and your practice. For example, what types of support systems, technology, and culture work best for your firm? Finally, you’ll need to closely compare your due diligence on what the new firm offers and how it conducts business with what’s important to you. If the lists match, then the new relationship may be right for you. If not, you may be better off looking elsewhere.

No matter what happens when your firm is acquired, it’s important to remember that you and your practice are in demand. Knowing your options and what other firms out there are offering not only puts you in the power seat but will help give you confidence that you are making the best decision for you and your business. Broker Dealer consolidation may help you obtain exactly what you need from a firm. And if it doesn’t, you have options. 

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