Considering tucking into an OSJ? Tips to avoiding potential ugly truths

The term OSJ or “office of supervisory jurisdiction” is commonly used in the independent broker dealer space.  It represents a series 24 licensed advisor that can supervise other advisors.  An OSJ can offer a variety of benefits that could include office space, access to a sales assistant, access to other successful advisors, help with growing a business or the feeling of being in a smaller organization within a larger one.  Some firms also offer access to an OSJ if their production doesn’t meet the minimum requirements set by the broker dealer.  Because an OSJ group typically has scale, they can, in some cases, offer an advisor the same of better payout if they join a branch than if they join direct.

While all of these benefits are attractive, there are several things an advisor should thoroughly investigate before they commit to joining an OSJ.

Clarify and get in writing answers to these questions:

  1. If there was ever a problem and you wanted to break away from an OSJ, would you be forced to change firms or could you stay with the broker dealer, join another branch or affiliate directly with the broker dealer? In almost every transition I am involved in, I find advisors don’t know that broker dealers favor the OSJ if a disagreement or issue is to come up. They will not want to upset the relationship with the OSJ as that person typically has more leverage since their group is larger. If that is the case, an advisor would have to ask the OSJ permission to leave their supervision. It is fairly common an advisor would have to change firms in order to leave an OSJ.
  2. Who owns the clients? I know it may seem strange to assume that because an advisor is joining an independent firm, that they would have full control of their client relationships, and in most cases, they do, but when joining an OSJ, you must make sure. Keep in mind, an OSJ has a lot of access and control of your day-to-day client activities. Make sure to have a clearly defined, written agreement that they will not reach out to your clients or try to hold on to them in any way if you are to leave.
  3. Back-end agreements between OSJs and broker dealers. Find out if there are any unwritten or undisclosed financial payments made if an advisor leaves an OSJ for another. This can affect your ability to leave a group if there is a problem.

Joining a branch can be a great solution for advisors, but it’s important to plan for worst case scenario. Ask the tough questions during the courting phase of the relationship in order to avoid unexpected restrictions should there be an unfortunate divorce down the road.

Jodie Papike is the CEO of Cross-Search, a third-party, independent broker dealer/RIA recruiting firm that connects advisors with the right broker dealers and RIAs. For more information visit www.Cross-Search.com

Jodie Papike

Jodie Papike is the CEO & Managing Partner of Cross-Search, the first third-party, independent broker dealer advisor and executive placement firm. Since joining Cross-Search in 1997, Jodie has been consulting with financial advisors transitioning to new independent broker dealers, guiding them through the entire process of identifying their most appropriate options, negotiating a deal and transitioning clients. Jodie has an intricate knowledge of the securities industry and a deep understanding of each of the major independent broker dealer firms, enabling her to help advisors find and transition to a broker-dealer that best suits their needs. Cross Search has placed thousands of advisors, producing more than 375 mill. in gross dealer concessions. Jodie takes the utmost pride in finding a firm for an advisor that will not only better their career, but will also be a good home for them for years to come. Jodie is a frequent speaker at industry conferences, is regularly quoted and published in publications such as Investment News, Registered Rep, Financial Planning, Life Insurance Selling and Advisor One. Jodie earned a Bachelor of Arts degree from San Diego State, graduating with honors.

Leave a Comment

You must be logged in to post a comment.