The Best Independent Firm Today
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Would like to hear your opinion on who do you think is the best Independent B/D out there today.Background: Spent 7 yrs w/ Edward Jones, now the last 9 yrs w/ LPL under my own DBA. In the Chairman Club (600K+ production), 93% payout. Has about $150K in their stock program, fully vests end of this yr. So please be professional, I don't want to see negative & nasty posts about Jones or LPL here. IMO, They were the best firms out there at the time. I'm still very happy about LPL, maybe just 95% happy now vs. 99% in the earlier yrs. But I do worry about the way-too-fast growth (just like Jones experienced). Think LPL now has over 12,000 reps by now. Planning to remain here for a while, but always looking around to see if there's any better independent firms out there. It took me 3 yrs to do the proper due diligence & research to leave Jones, so probably will take a while to look around. Only interested in other independent firms. 100% sure not going back to Jones or any other wirehouse, bank, or insurance co. Just indy. Any nominations? Thanks,
The grass is always greener over the septic field. If you get to the point where you do not want to show up to work tomorrow, then make the move. I’ve worked for Jones, Wachovia, and independent with Raymond James for the past 5 years. LPL may need to improve but why risk your book in a move?IndyEDJ
I get the same feelings at times about LPL. Little client fees annoy me, things not working the best way in my mind, slow to change... those are a few EDJ things that seem to be deja vu for me. I have gotten a lot more patient though. It seems just after I make a change on something, the previous provider cleans up their act and comes out with something better. LPL seems to be really rolling this year on new systems and capabilities. Still slower than a tiny B/D but I think you lose a lot of scalability and other benefits. I would like to see more of a unified uprising amongst LPL reps on things like getting new websites rolled out, cutting client fees not just advisor fees, giving us more portfolio management tools vs. the very weak recent portfolio rebalance now tool (that thing is a joke).
Indy,Why would there be risk in moving your book from one indy B/D to another? I've never asked this, but what happens if an indy advisor quits, dies, leaves, whatever? Where would his account reside? Would it be taken by some LPL (or other BD) home office broker? I always assumed if you were an indy, and you did business under a DBA, that it would just be back-office change. Yes, there would be ACAT's to process and all that, but wouldn't it be fairly transparent to the client? (other than the new B/D)
Risk in moving would be exactly what you described, ACAT’s and a lot of ‘change of b/d’ forms for all your other biz not held at the B/D. Clients would obviously be involved in the process and changing firms frequently is going to tire out the clients just as much as it will tire you out. I think you have to be pretty unhappy to go through the pain of moving every few years. Of course there are the folks who move frequently just to avoid accountability and complianc.The euphamistic truck analolgy depends on what the rep has done. You can have a disability/death agreement with another rep, providing an income stream or payment for your heirs if something happens to you. If you have other reps in your practice that is the most logical place to start. If you are totally solo set an agreement with someone you meet through firm conventions and training that you like. If no agreement is made, the B/D is generally going to change everything to a house account then refer the business back out to other reps near the clients. When you are independent and clients call your firm looking for a new rep, they will refer your clients to other reps in your area.
If you die (or leave) at LPL, and do not have a signed succession plan in place with another LPL broker, all of your accounts become LPL house accounts. They will get a letter stating that you left, died, whatever.They do not like to refer to local LPL reps, as they feel they could be liable if that LPL rep screwed the client. If you are a local rep, it's a pretty easy change (one form) to become the servicing rep, but LPL won't give you a list of the households of the departing broker. Make sure you have a succession of commission form on file with LPL. Especially if you're married. If you die without one, your spouse gets nothing. If you have one, your spouse will get some pre-agreed on portion of your trails and fee based business, while the guy (or girl) you signed the agreement with services the client.
The first and foremost thing I am referring to is that clients do not like change. Everytime you change firms or B/D you will lose 10-20% of your clients. I have been through 4 moves and I lose some everytime. I know, I know someone out there took 110% of their clients but they are the exception rather than the rule. If you are out there as an independent already with a decent firm, why risk it?IndyEDJ
Definitely don’t jump ship ever time you get frustrated, likely that means you just aren’t suited for the job. I left EDJ fast, but wont’ move again unless something horrible happens. Changing just costs you a lot of money in client frustration, headaches for yourself, learning curve, new marketing materials, etc… I brand our practice so if I do change, only the tiny little disclosure part would change, but accounts would still need to be moved, performance history, cost basis, legal documents imaged, etc… would all have to be done, again. Make a good choice so you don’t have to make another change soon. I also look at other reps to possible add to my practice, and when I see 3 or 4 firms in as many years, I figure they are just running from compliance so they can keep switching people. I am sure there are other reasons, but that is easy enough for me to screen out.
Yeah, I hear compliance is becoming a real stickler but you should really just go out and visit several advisors who clear with the firm to get a good feel for how they operate the b/d.