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Small Broker-Dealers Enjoy Big Benefits as Branch Offices

A Bonanza for Branch Builders

15 Feb 2017
A Bonanza for Branch Builders

For entrepreneurial branch builders, the market is ripe with recruiting opportunities.

Increasing compliance and supervision expenses are leading many small independent broker-dealers to wind down. On the other end of the spectrum, financial professionals at some large broker-dealers have been growing dissatisfied with a lack of personal service and recognition. 

And as many broker-dealers establish minimum production levels – some as high as $500,000 – smaller producers who aren’t hitting their mark are being pushed out.

Add to that mix growing numbers of financial professionals from wirehouses and other captive environments being drawn to the freedom of owning an independent practice, and it’s easy to see branch builders have a wealth of opportunities to recruit financial professionals who can increase revenue, distribute overhead and play a role in their continuity plan. 

But before you dive headfirst into the competitive recruiting arena, it’s important to understand the commitment it takes to be successful.

“Recruiting is a numbers game,” said Gary Bender, Securities America first vice president and national director of recruiting. “You’ve got to be prepared to put time, energy and resources into it. You can say you want to recruit, but if you don’t put in the time and energy, it’s not going to happen.”

Getting Started

To start the process, list your reasons for wanting to build a branch, your personal strengths as a branch manager and specifics about the ideal financial professional for your branch. Keep in mind, anyone who joins your branch will represent your value proposition to your clients and community. So examine your value proposition closely. It will tell you what you are looking for in a professional who fits your goals.

Next, develop a comprehensive recruiting strategy that clearly shows prospects the advantages of what you bring to the table. It’s vital for prospects to understand exactly what you have to offer, so they can make an educated decision that is best for you and them.

“If financial professionals cannot sift through their options and formulate their own structure, their business and their clients can suffer,” said Gregg Johnson, Securities America executive vice president of branch office development and acquisitions. “But by joining an independent broker-dealer branch, they can get help with forming the right business structure from a branch manager who will be their guide.”

 

Five Key Points for a More Powerful Recruiting Pitch

To make your recruiting pitch more impactful, be sure to include these four key points:

1. Culture — Because financial professionals typically work more closely with an OSJ group than a broker-dealer, your branch’s unique culture can play a big role in their decision-making process. To effectively sell your culture, it’s important to have a mission statement and core values you can easily communicate. But more important, you need to show prospects how you and your employees support that culture and live out those values every day.

“Everyone speaks to culture, but it has to be developed and worked on,” Bender said. “At Securities America, our firm speaks to that. The executives live and breathe building that culture and ensuring we have 500 happy employees. When people come in for a home office visit, they see our culture at work and how we treat our employees.”

Use these elements to provide a framework for articulating your branch’s culture to prospects:

  • Professional development
  • Leadership
  • Branding
  • Community
  • Technology
  • Process and procedures
  • Continuity
  • Advocacy

 

2. Business Growth Tools — You can never offer too much service and support, so be sure to let prospects know exactly what they’ll receive as a member of your branch. 

Will your branch provide administrative services? Lead generation? Supervision oversight? Best practice solutions? Size and scale are important to financial professionals deciding on the ideal branch and its broker-dealer counterpart. Many are looking for a firm large enough to provide leading products, services and technology, but small enough to provide personalized support and maintenance. 

“Our broker-dealer gives our branch great flexibility in the support, products and platforms needed by such a diverse group of financial professionals in one branch,” said Todd Terhorst, branch manager for Diversified Wealth Management in St. Louis Park, Minn. “Our financial professionals have a variety of platform types they can choose to operate a fee-based, commission-based or hybrid practice. I have the ability to tell financial professionals they can join my branch and receive all the support they would like, while doing business how they want, when they want and under the name they want.”

Because broker-dealers often offer more competitive pricing on services and products to their larger branches, many financial professionals discover joining a branch rather than directly joining a broker-dealer makes more sense financially.

3. Coaching, Mentoring and Training — Ongoing opportunities to learn are essential to growing a business. Be sure to provide prospects a list of all the educational opportunities they’ll receive by joining your branch. Don’t forget to include success stories of those who have benefitted from your training and coaching programs. 

4. Support Services — Does your OSJ branch offer the compliance and supervisory support financial professionals need to free up more time to serve their clients? Assistance in transition? The opportunity to use support staff, office furniture and equipment to save time and money on hiring administrative support and leasing and outfitting an office of their own? 

Don’t forget to include your branch’s relationship with its broker-dealer and the support financial professionals receive from that level as well.

5. Compensation — It isn’t uncommon for a prospect to focus on how much your branch charges. In those cases, you’ll need to be prepared to explain what they’re gaining in return for a slightly lower payout. 

The costs associated with technology, compliance and business development continue to rise every year. Affiliation with a branch office can help financial professionals control these costs and better manage a state-of-the-art financial services practice.

To show prospects the financial advantage of joining your branch, prepare a grid that shows how payouts are structured if a prospect is responsible for paying all their own expenses including office and rent as opposed to paying an override to the branch to receive those same services.

Upheaval and change in the industry have many financial professionals on the move or considering a move in the not-so-distant future. While this can present retention challenges for some firms, it also presents a rich recruiting opportunity for those who have the right plan and tools to stand out from the competition.

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