What The Heck is an OSJ, Discussion Recap

I recently sat down with Tobias Salinger from Financial Planning Magazine to discuss a topic I talk about daily with advisors I consult with and that is, what is an OSJ?  I was grateful to discuss the pros and cons of an advisor tucking into an OSJ as I feel many firms don’t properly explain the structure before an advisor commits to joining one.  In this conversation, we chat about:

  • OSJ stands for “Office of Supervisory Jurisdiction” and is primarily used in the independent financial advisory world.
  • Today, OSJs offer different services and value propositions, including recruitment and support for advisors.
  • OSJs are affiliated with broker-dealers and offer various compensation models, often based on a percentage of an advisors payouts.
  • Advisors need to understand the specific terms and agreements when considering OSJ affiliations, including potential exit strategies.
  • The complexity of OSJ relationships stems from variations in requirements, compensation structures, and the negotiation of terms.
  • Override fees, which OSJs receive, depend on the services they offer to advisors, ranging from supervision to comprehensive support.

Like any other decision an advisor makes about the way they affiliate with a firm, it’s best to always explore the advantages and disadvantages of affiliating with an OSJ.  My most important piece of advice to anyone entering a new relationship with an OSJ would be to think about the worst-case scenario and protect yourself (in writing) during the courting faze of the relationship.  Make sure there is a path forward if you choose to leave the OSJ and always have it in writing that your clients are yours should you leave.

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