By James Morris, Questar Branch Office Designated Supervisory Principal at Ann Arbor Annuity Exchange
Recently there has been a lot of press about broker/dealers merging or being purchased by larger firms. These changes can make advisors nervous because it is rarely clear to the average person why mergers or buyouts occur. There are typically rumors or vague corporate jargon, but advisors are often left to wonder why they now have to find a new home, or accept that they are being forced to join a firm that they previously passed on or know nothing about. If you find yourself in a similar situation and are wondering what to do or where to go, please read on.
The first thing you should do is determine if you want to join the new broker/dealer and assess how that broker/dealer change will impact your customers. What new paperwork will be needed and when does it have to be completed? How much will the clearing firm fees be? If there is a clearing firm change, what ongoing fees will your customers be responsible for that your prior clearing firm did not charge? What are the service levels your customers can expect to receive along with the online portal for customer account access? These changes may create challenges for you that did not exist at your prior firm.
Now that you have addressed your new customer experience, what steps will you and your office need to take to adapt to a new firm? Will the new firm compensate you for the disruption to your business during the transition? Will you receive one-on-one transition support for your first year with the firm or will you be treated like a number with no personal service? During a broker/dealer transition you need a dedicated person to answer your questions. If a firm is transitioning thousands of financial professionals, what service level can you expect?
Will your pay-out rate, commission cycle, and errors & omissions insurance cost change? What are the production and compliance requirements? Will the fee structure be the same? Will the business you have built be treated with the respect you have worked hard to establish?
In some cases, the purchasing firm will only prioritize large producers or groups, while other consistently successful representatives that may not have the highest level of production are not given similar service levels. These producers usually do not join the purchasing firm or leave shortly after the merger. If you fall into the latter category, please do not waste your customers’ time or yours by joining a firm that will not be a good fit. Please evaluate the current broker/dealer landscape before committing to join a new firm.
Remember, changing broker/dealers is a long-term decision. If you have been notified that your broker/dealer is forcing you to join another firm, please call me to discuss your options. I can offer my experience and working knowledge of the B/D space, various business models, and incentives to join other firms to help you determine if they may complement your practice more than your current offer. As well, Ann Arbor Annuity Exchange has partnerships with many firms catering to various producer needs and AAAE’s marketers can be a great resource to help guide your practice in a new direction.
James Morris | Designated Supervisory Principal
Questar Capital Corporation Branch Office at AAAE
Ph: 800.321.3924 x159 | Dir: 734.786.6159
Securities offered through Questar Capital Corporation (QCC). Member FINRA/SIPC. Advisory services offered through Questar Asset Management, a registered investment advisor. Ann Arbor Annuity Exchange is an affiliate of QCC.
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