Can anyone know with 100% certainty that a partnership will be a perfect match or that it will last forever? The obvious answer to this question is, no. So how does an advisor choose a broker dealer, hoping promises will be kept and that change wont ruin the agreed upon partnership? The best answer is, due diligence, and knowing what questions to ask a broker dealer.
Changing broker dealers is a major decision for any advisor. Finding the right fit for your practice is like putting together a 500 piece puzzle as a multitude of factors need to be explored before a decision is made. At the same time, the broker dealer universe is ever changing. Keeping up with firms that are selling, going out of business or are having regulatory or financial troubles is a mighty task. Now more than ever, the background of a broker dealer and their long term plans are crucial to understand before a move is made. And although doing due diligence on broker dealers can be a time consuming process, I feel it’s as pertinent as any other business decision and deserves time and attention. And while advisors typically know to investigate the more obvious broker dealer characteristics such as payout, product availability and technology, the broker dealer landscape has changed. Those standard questions are no longer enough.
In my next story in InvestmentNews I outline less known broker dealer due diligence questions that I feel every advisor should explore before they transition their practice to a new firm. It may be difficult to find answers to all of your questions, but I feel it’s more than worth your time. I am a big believer in the benefits a strong, long term broker dealer partnership can have on an advisors practice. Those partnerships do exist and I see them every day. But at the same time, I have seen way too many advisors affected negatively by decisions their broker dealer has made. Before you take the leap and move your practice to a new broker dealer, take your time, do your due diligence and figure out what questions to ask a broker dealer.
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