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Articles Written by Jon Henschen

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Small Producers Are Crazy, Large Producers Are Eccentric

18:48 02 August in Articles Written by Jon Henschen by rafferty

July 29, 2019 By Jon Henschen, WealthManagement.com You’ve probably heard the saying, “The poor are crazy, the rich just eccentric.” It originates from Ellen Raskin’s 1979 mystery novel, The Westing Game, and it addresses the view that the rich are granted a lot more leeway in their actions than the poor. The rich earn respect just by having money, while the poor are considered disposable and crazy. At the compliance level, the broker/dealer community lives this in spades. For example, when a $200,000 producer forges a signature, he’ll be terminated immediately, while a $2 million producer committing the same offense may see a $5,000 fine and a verbal slap on the wrist. Broker/dealers look at compliance disclosures on a risk-reward basis. Advisors with ample production can also have multiple Financial Industry Regulatory Authority (FINRA) disclosures, and...

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Highly Productive People: Which Political Systems Nurture Them, Which Crush Them?

19:03 29 July in Articles Written by Jon Henschen by rafferty

July 26, 2019 By Jon Henschen, Intellectual Takeout 50% of the work is done by the square root of the total number of people who participate in the work. With my background in financial services, recruiting financial advisors and financial planners, I see patterns in terms of productivity. A large percentage of advisors’ production falls between the $100,000 to $250,000 range. A much smaller percentage exceeds the norm, producing $1,000,000+ of fees and commissions. These select few with production over $1,000,000 are in demand because they are more profitable to the broker dealer. To attract the select few, a broker dealer will offer greater commissions, lower expenses and fees, and more transition money for a productive advisor to join his force. “Price’s Law,” which originated from British physicist, science historian, and information scientist Derek Price,...

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4 Reasons Small BDs Are Under Pressure

15:29 07 June in Articles Written by Jon Henschen by rafferty

June 6, 2019 By Jon Henschen, ThinkAdvisor Though BDs in general are seeing higher profits, several trends are mounting against smaller firms. Higher interest rates are enabling money market accounts, sweep accounts and margin accounts to contribute noticeable profit increases to the bottom lines of some broker-dealers. But though we’ve seen a bump up in profitability for BDs in general, we also see some worrisome trends unique to smaller organizations, which will work against their future survival. Here are the four trends most affecting small broker-dealers today: Fewer mutual fund sales and more ETF sales; Fewer REIT and alternative investment sales; More retiring advisors, lower rates of succession plans and recruiting difficulties; as well as A lack of scale, which puts them at a disadvantage on the services they offer, their technology and profitability Lower...