4. <b>Pat McEvoy</b>, president of Woodbury Financial Services
Before Changing Broker-Dealers, RIAs Should Ask Themselves These Questions
Why are you leaving?
Why youre leaving is as important to know as where youre going. The same things that are making you want to leave are the things you need to look into, so you dont end up in a similar situation and feel the need to leave again.
So the first question you might want to ask yourself is: What are the major issues within your practice causing you to find that the current broker-dealer is not a good fit? There usually are just a couple of reasons advisors decide to leave a firm the first might be that the firm no longer lines up with your business, and the second would be the culture.
Once youve answered that question, then decide if you want to make a move to an independent firm, or to a wirehouse or a bank.
Whats the ownership structure of the new firm?
Is it owned by private equity, publicly traded or owned by a parent company, for example? How does that ownership structure fit in with your vision of where youd like to be?
What do you feel you need to be better at?
Whats missing, or whats the flat spot in your practice? Maybe you want to expand into estate or tax planning, or have better technology? See if the new firm is a good fit, given what youre trying to build into your own practice.
What charges and and expenses will you be facing at the new firm?
Many firms have considerable fees that are applied across the board. Look at the non-revenue income of a firm to determine if those expenses are fair and reasonable. Determine if the firm is making a profit on your practice in ways that dont support your business model.
What is the long-term sustainability of the firm? What if there are lawsuits? The answers to those types of questions will give an advisor a perspective about the type of firm theyre joining.
What kind of communication strategy has the firm developed?
Its important to make sure the firm does have a communication strategy in place. At Woodbury, were very persistent in helping our reps and advisors be good at communication, setting up automated ways for them to notify clients if something unexpected comes up like a natural disaster. If they become injured, we have systems for notifying clients as well. Its hugely important to find a firm that will support you in keeping in touch with all your clients.
What compliance tools are offered by the broker-dealers investment advisory platform?
Independent RIA firms are feeling the pressure to comply more and more, and see advantages in affiliating with broker-dealers who can offer the same support at less cost thanks to scale than it would be for the RIAs alone.