Selecting the Right Broker-Dealer

Selecting Broker DealerThe decision of which broker-dealer to join can often represent one of the most important decisions a financial professional can make. This is because the selection of the “right” broker-dealer can result in a highly beneficial long-term relationship that allows the advisor to grow and develop his practice. Alternatively, picking the “wrong” broker-dealer can result in unnecessary complications and frustration that detract from the advisor’s ability to service his clients and grow his practice.

What should an advisor be looking for in selecting the “right” broker-dealer? The following list contains those items that we think you should consider. Some, of course, may be more important to you than others, depending on the advisor’s particular needs and objectives:

How well does the broker-dealer service its advisors? Perhaps the biggest consideration of all! Given the important role that service plays, advisors should be certain that the broker-dealer is committed to providing the best service possible. What’s the easiest way to check? Talk with the broker-dealer’s existing advisors to see if the firm is really committed.

How well capitalized is the broker-dealer? The last thing that an advisor wants is to be forced to change broker-dealers because his firm is not sufficiently capitalized. Firms that maintain only the minimum required net capital are extremely vulnerable. Firms that have significant excess capital and financial security should be viewed more favorably.

Will the broker-dealer work with me to grow my practice? While many independent advisors like to be “left alone”, there are also a number who are interested in growing their practice. Ask the broker-dealer what types of programs they have in place, including training, coaching and other practice development resources.

Does the broker-dealer provide upfront money? Today, almost all broker-dealers provide some form of financial transition assistance to advisors for joining their firm. One of the most common forms comes in the form of a forgivable loan. Before signing the note agreement, an advisor needs to understand what he is signing. Many notes contain strict provisions that may require the advisor to pay back some or all of the note, or extend the amortization period, if certain production targets aren’t hit.

All of these decisions are important factors in making the determination of the right broker-dealer. For more information on Summit Brokerage Services, visit www.joinsummit.com or contact us at (800) 354-5528.

Stay Connected

Subscribe to Summit Brokerage

Personalized Industry Newsfeed For You

Thank you. You are now subscribed.

Close

Thank you. We will get in touch with you shortly.

Close