Maybe your current brokerage relationship has gotten too small for where you think your business should be going. To find a fit, you need to take your measurements.
A lot of advisors feel that the professional relationships they pick early in their career should last them until they retire. Nothing could be further from the truth.
Your brokerage affiliation as well as a custodial or clearing firm may have been a great fit when your business was young and your clientele had simple needs. After 10 or 20 years, your business and theirs may grow apart.
The independent B/D world has changed dramatically over the last five years and seismically over the last 10. Meanwhile, you're probably not the same businessperson you were a decade ago or two.
While loyalty often keeps an advisor with a B/D or custodian, it's usually inertia.
You know you've outgrown the relationship, but you've been out of circulation so long that you have no idea what other B/Ds and custodians are providing their advisors these days.
You'd have to consider which of the myriad of options would be best for your clients and prospects. Plus, what's in it for you if you make a switch? How could a new B/D relationship help you improve efficiency or lower your costs?
Even if you your research only to extract a better deal from your current brokerage relationships, you come out ahead.
One of my recent clients wanted to find an IBD that would be more willing to finance acquisitions, and another who wanted one willing to fund his own transition out of the industry. Both got what they wanted.
The first step is taking ownership of your professional identity. This is YOUR career and these are YOUR client relationships. YOU are the one who wants to evolve here.
Now take the “measurements” of your business. Most of advisors are intimately aware of these vital statistics -- AUM, production per client, percentage of recurring versus transaction-based business -- but the key here is to compare them to the mean for other advisors affiliated with your IBD.
Are you a big wheel in this network or a small one? If you’re too big, where are you pushing the seams?
And if you’re actually smaller than average, what are the best features of your business that you want a new affiliation to emphasize?
Focus on your clients, too. What does your current affiliation let you do really well for them? What do you need to do that you can’t do at your current firm?
Remember, this is about finding the best fit for your clients as well as yourself, because if nothing else you’re going to have to explain how your transition will pay off for them.
Next, conduct a similar exercise with every firm that you’re thinking about signing up with. Will you be a key player? If not, how will you use the firm’s capabilities to become one?
This is important for two reasons. First, it clarifies in your own mind that you’re not jumping for the sake of variety -- you’re looking to jump to a firm that gives you what you need to grow the way you want to grow. Always pick a firm that gives you room to grow.
Second, it gets you ready to make your case when negotiating a transition package. Once you know exactly how a practice like yours fits into a new IBD network, you can articulate the mutual value proposition you -- and only you -- can squeeze out of the relationship.
And articulating that proposition brings you a lot closer to quantifying what you’re really worth to your new firm, which translates into a fairer package because they’ll know they’ve got a better fit.