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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...

How Proprietary Advisory Platforms Conflict With Fiduciary Standards

13:23 22 September in Articles Written by Jon Henschen by rafferty

September 21, 2021 By Jon Henschen, ThinkAdvisor What You Need to Know Broker-dealer corporate RIAs are seeking to recruit advisors who will bring large amounts of assets to their proprietary platforms. The conflict-of-interest standards for promoting products like mutual funds don't seem to apply to advisory platforms. To keep assets flowing to their best profit centers, some BDs are keeping their advisors in the dark on better offerings. Broker-dealer corporate RIAs have jumped on the proprietary advisory platform bandwagon at a rapid clip over the last five years. We’ve been approached by broker-dealers wanting us to recruit advisors to their broker-dealer with a focus on bringing advisors to them, not only with a large percentage of advisory assets but assets that will specifically go into their proprietary advisory platform. Financial products such as mutual...

FINRA’s New ‘Restricted Firm’ Plan is on it’s Way

14:22 10 September in In the News by cristi.barkley@gmail.com

September 8, 2021, By Melanie Waddell ThinkAdvisor Broker-dealers with a history of misconduct who have also hired a high percentage of brokers with a similar track record need to brush up on a new Financial Industry Regulatory Authority rule that seeks to expose potential risks to investors by labeling these broker-dealers as “restricted firms.” FINRA’s plan, approved by the Securities and Exchange Commission in late July, adopts Rule 4111, which uses criteria to decide whether to designate BDs as “restricted firms.” The rule becomes effective within 180 days of when FINRA issues a regulatory notice, which FINRA plans to do by the end of September. As part of the SEC approval, FINRA will propose amendments to Rule 8312 (FINRA BrokerCheck Disclosure), to provide information as to whether a particular member firm or former member...