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Prepping for a broker dealer change

Broker Dealer Change tips

For years regulators have been ramping up the pressure they put on broker dealers.  One area they have focused on significantly is in the recruitment of advisors and the due diligence a broker dealer does before they license someone with their firm. Consequently broker dealers are scrutinizing advisors they bring on more than ever before.  Broker dealers look closely at an advisors background including their credit history and regulatory background so that they can justify to regulators why they are comfortable and if appropriate, what they are doing to supervise advisors even further than they normally do. Every advisor, regardless of their past should be organized and ready to present their practice in its best light starting with their first introductory phone call, presenting key information such as compliance history, gross-dealer concessions, assets under management and product mix.  How you manage your business, bring in new clients and support that business are also all factors that the broker dealer will need to know up front, and that you’ll need to be able to communicate before a broker dealer change. 

Additionally, it’s up to the advisor to help their new compliance department understand any gray areas on their record and to do so up-front.  Just as critical is communicating what’s important to you and what you need and want from a broker dealer. Broker-dealer recruiters will present features that may be enticing, but that may not be important for your practice. A little preparation to help the broker dealer understand your business and what you need in return will save both you and the broker dealer time.

In my next article in Investment News, we explore steps advisors can take in the process of making a broker dealer change to present their practices in the best possible light and increase their chances of being accepted to the firm that will best meet their needs.

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