Have You Thought About What Season Your Practice is in?

PAID CONTENT

We have formed a new, flat fee dealer, Designed Securities Ltd. In our former experiences as CCO and CFO at a mid-sized dealer, we encountered change at all stages of the business, from early growth, to navigating the beginning of the pandemic, to selling a majority stake to a large financial institution. Since the sale jeopardized our belief in independence, we both resigned and here we are 12 months later. In our journey to date with Designed Securities Ltd., this last year had a recurring theme of Change and Transition, marking not only our professional journey, but those of the industry as well.

With that in mind, we’ve set out to create a 4-Part series representing a metaphorical changing of seasons for an advisor’s practice, with each “season” being a take on transition from a different perspective.

Change in the investment industry is constant and has a significant impact on staff at a dealer’s head office, an advisor’s practice, and a client’s experience. With regulatory change, evolution resulting from the pandemic, and industry technology trends, it was a jam-packed year. Change can be viewed as a continuous ebb and flow aiming to enhance value, evolve service and find more value. While transition can be viewed as a more isolated event, undertaken in pursuit of meaningful improvement.

Winter is a time to reconnect, reflect and retreat. We first reflect on ourselves. As we look back over the last few months, with help from Aviso Correspondent Partners and Mako Fintech we have successfully transitioned 10 advisors (some of whom are portfolio managers) to our dealer. With regulatory approval only as of late June 2021, we consider this to be a great start. However, as we head into the holiday season, we all have a moment to slow down. It’s in these slower moments we challenge ourselves. We have areas we want to improve, new technology on the horizon, and ideas from our advisors that we will be implementing in 2022. Since we operate without entrenched management, legacy systems, long-term leases, etc., we can be proactive and flexible in designing how we develop in the next 12 months.

While we have deliberately sought feedback and ideas from our advisors, we wonder if other dealers do the same? When advisors tell their dealers what they don’t like about their current situation, is anything done about it? Are dealers asking advisors what their ideal situation is for the future? Or do advisors find out that head office has already made the decision hoping the advisor will be sold, no questions asked. If the dealer is projecting their solutions on advisors without first understanding their needs, or perhaps they are not making significant progress in optimizing their experience or that of their clients, perhaps its time to consider a change of season. For the advisors who have joined us, their transition is one already paying dividends in collaboration and direction.

To make the decision to leave their current dealer, the new dealer must solve an advisor’s current problems. Transitioning is a confidential topic of discussion for obvious reasons, but we wanted to share some key items arising from our own recruiting conversations that are influential in making this decision.

Fear of upheaval – We recognize the apprehension heading into a transition, but with digital onboarding, and strong dealer support, the upheaval is significantly less than a transition seen as little as 2 or 3 years ago. Our team becomes an extension of your office to ensure the transition is efficient. We recently transitioned a $230 million book of business and 95% of the accounts were opened in 15 days. Also, with an average of 10 days to transfer assets, upheaval is no longer cluttered with the same pain and suffering as before.

Irony of independence – Many of our competitors are claiming to be independent, while simultaneously telling prospective advisors how much they will “cash out” when they sell to a large financial institution in a few years. Further, many so-called “independents” are influenced by their parent company in one way or another. As dealers become less independent, advisors have less autonomy, diminishing influence with decision makers to hear their voice, inevitable rebranding, shrinking or stagnant product shelves, and the list goes on. When you pull back the curtain, most dealers are not all that independent. That’s why we have made a written commitment to advisors that we are not for sale.

As Part 1 of our series, we’re only hoping that these shared insights give you something to think about. It’s not always a transparent landscape, but based on our past 12 months, these areas are common denominators in an evaluation of your current status. Winter is dark and cold, but it presents a great opportunity to turn things upside down to look at your practice from new perspectives. Connect and follow us on Linkedin to stay informed on Part 2 of our series, where we will explore other decision factors including how a carrying broker affects a transition.

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