Articles Written by Jon Henschen

Three Hidden Broker-Dealer Profit Centers Exposed

From the March 2015 issue of Investment Advisor Magazine

By Jon Henschen

There’s nothing wrong with broker-dealers being profitable, but how those profits are obtained could use a good dose of disclosure. Representatives deserve to know that what they are paying is a true cost and what they are receiving is the best possible commission from a vendor.

First, let’s look at the profit centers that are relatively obvious to reps. In addition to the spreads broker-dealers receive from payout grids, there are two other primary sources of broker-dealer profit: revenue sharing and markup.

REVENUE SHARING BETWEEN BDS AND VENDORS

Revenue sharing happens between the broker-dealer and the product vendors,

Are Privately Owned Broker-Dealers a Dying Breed?

December 2014 issue of Investment Advisor

With the recent sales of broker-dealers, have you noticed how many BDs in the top 50 are privately owned? This was the question posed to me by David Fischer, CMO of Independent Financial Group, a broker-dealer based in San Diego.

Frankly, I hadn’t thought about it. So I did some research. In 2008, there were 20 broker-dealers in the top 50 that were privately owned. Fast forward to 2014 and that number drops to 10, a 50% decrease.

During our conversation, Fischer said that his group is loving the fact that his firm is part of a decreasing pool of privately owned broker-dealers because their recruiting has been on fire—they recently brought on a $1.5 million producer within weeks of obtaining another large producer group.

Our Human Capital Disaster: Three big trends will exacerbate the advisor talent shortage

September 2014 issue of Investment Advisor magazine

and the September 17 issue of ThinkAdvisor’s Daily Wire

By Jon Henschen

It may not be news that the advisor community is facing a labor shortage just as demand for professional advice is peaking. What is news is the scale of that shortage, and three overlooked trends are already playing out with the potential to make that shortage a catastrophe.

Men account for the overwhelming majority of existing advisors—around 80% or even more among some sectors of the advisor community. Moreover, a very large chunk of advisors—43%, according to Cerulli—are in or nearing their traditional retirement age. Finally, the percentage of advisors who are women has not appreciably increased since the industry began keeping track of that statistic.