I was asked to write an opinion piece for Financial Advisor IQ (A Financial Times Service) on the relative merits of regional broker/dealers versus the competition – larger B/Ds as well as the independent or quasi-independents. Contact me if you would like a copy of the entire piece.
To summarize though, overall. regional B/Ds have done quite well since the financial crisis, helped by cheaper technology which has allowed them to compete with fewer resources.
To quote from the piece: “Key ways in which regional brokerages are positioning themselves as a happy medium between the wirehouse and RIA models include:
- Access. Advisors who are large or even moderately large producers will probably have the ear of the decision-makers in the home office. They will be more important to these people than if they were large producers at a wirehouse or at an RIA using Charles Schwab’s or Fidelity’s investment platforms. They will have access to people when they need them and be on a first-name basis with key executives. They’ll also have better access to support staff. And advisors with friends in the back often receive service that has a personal touch.
- Influence. As a result of their access, advisors can influence product and platform decisions. For example, large producers will likely be invited to serve on an advisory council, where their opinions will count more than those of their peers.
- Freedom. Regional brokerages generally have fewer proprietary products than their larger counterparts do. Therefore, advisors are under less pressure to offer in-house products to clients, who often perceive a conflict of interest in such sales. This independence appeals to advisors attracted to the objectivity and fiduciary status associated with RIAs. Additionally, regional brokerages are not associated with banks, which reduces the pressure to cross-sell bank products.”