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Indy B/D or straight to Schwab or Fidelity?

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Jan 8, 2009 4:40 am

I have been studying broker dealers and planning my exit for over a year now, and want to ask the forum:

  If I can get everything from Schwab or Fidelity directly, why look at LPL, Commonwealth/Cambridge? If you were jumping off the EJ Express, and knew what you do now, what would you do differently? Would you be flexible with fees for existing commission clients, and set up as RIA only?   I know there are lots of old threads on this, and am looking for people's thoughts NOW. Things have changed a little in the last few months...!   THANK YOU!
Jan 8, 2009 10:39 am

How have things changed?

Jan 8, 2009 3:09 pm

Hank, what I meant was that the financial crisis has brought about changes in all firms. The Indies are going to be tighter with forgiveable loans, fer instance. Supply is high on the recruiting side, but perhaps right now reps are waiting for things to stabilize, and delaying taking the plunge, etc., etc.

In other words, it aint like it was in May.  
Jan 9, 2009 3:23 am

Depending on business mix, if your 90% + fees already, is keeping a b/d worth it?  It depends on whether you determine it necessary to offer commission services or not.  Often times, if your business mix is say, 60% fees/ 40% commission, keeping a b/d is a necessity.  If you do plan on doing more fee business, I'd recommend exploring a Hybrid Advisor program which would allow your own RIA and working with a B/D firm which doesn't haircut your RIA business and also doesn't charge any admin fees on rep-directed fee business.  Of course, some B/D's may allow you to operate your own RIA while taking a haircut of say 10% and charge 5, 10, 15 bps, whatever -- I guess then the question to ask yourself would be, "are the services provided by the B/D sufficient and valuable enough to warrant paying the haircut every year?"  Forgivable loans in the Independent space are ranging from 5 - 20% on average more or less depending on a wide variety of factors.

Good Luck in your search.
Jan 10, 2009 3:13 am

I recently went Indy and went with Fidelity IWS, so far so good.  My book was 90% fee based before I jumped so it was almost a no brainer.  Looking forward to the 100% payout in March.

Jan 15, 2009 6:52 am

Check the type of deal Fidelity will give you (your own RIA). You may find a larger RIA can negotiate a better deal with the firm due to more assets at the custodian. The biggest money maker for the custodian is the sweep accounts and NTF (no transaction fee) funds. So the bottom line the more $$$ the more negotiation leverage you have.