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Author: rafferty

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5 Reasons Going RIA Beats the IBD Model

19:58 05 December in Articles Written by Jon Henschen by rafferty

November 30, 2021 By Jon Henschen, ThinkAdvisor Two primary threats to independent broker-dealers are advisors retiring or going the RIA/dual-clearing route. Even though many broker-dealers have become friendly to advisors who to want operate with a hybrid approach, many of the larger BDs have been shutting the door to dual clearing, which generally lets advisors custody advisory assets with the BDs’ own clearing firm(s) and at TD Ameritrade, Schwab, Fidelity Institutional Wealth Services (IWS) or Interactive Brokers. Broker-dealer profit motives are the primary driver of the split from dual clearing since assets held with their own clearing firm are far more profitable than those held outside of it. With certified financial planners now required to uphold a fiduciary standard of care for client investments, we see a clash of interests that will further drive advisors to go RIA and hold advisory assets outside...

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With the rise of RIAs, recruiters must change their game

16:20 04 November in In the News by rafferty

November 2, 2021 By Bruce Kelly, Investment News As the grip of the Big Four wirehouses — Merrill Lynch, Morgan Stanley, UBS and Wells Fargo Advisors — on financial advisers has lessened over the past 10 years or so, one of the main arteries for attracting new financial advisers, recruiting, has evolved as well. Twenty years ago, around the time of the dot.com stock bubble, if a reporter naively asked a third-party recruiter who worked with wirehouses whether an adviser would consider moving to an independent contractor broker-dealer like LPL Financial or Commonwealth, the recruiter would have laughed and said, “Not in a hundred years.” OK, the payout is higher at the independent firm, but where’s the lead generation? Where’s the brand? Where’s the upfront bonus? Where are the stock options? In short, where’s...

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Price’s Law And Large Broker-Dealers

21:42 01 November in Articles Written by Jon Henschen by rafferty

October 29, 2021 By Jon Henschen, FA Financial Advisor It was Derek Price, a British physicist and information scientist, who discovered that it was often a small percentage of subject matter experts among his peers who dominated the publication of academic papers. From him we get Price’s law, which says half the publications on a subject are written by the square root of all the contributors (in other words, that five people out of 25 will get half the work done). Let’s adapt that rule to corporate cultures. Jordan Peterson, a best-selling author and professor of psychology, says Price’s law suggests that as a company grows, the incompetence grows exponentially and competence grows linearly. It means that if a company has 10 people, three people (30%) are doing half the work, and at...