BD Back-Office Consolidation: Profit Bonanza or Service Boondoggle?
February 22, 2017 By Jon Henschen as published on ThinkAdvisor Even before the Labor Dept. fiduciary rule has been implemented and now likely delayed for 18 months, broker-dealers are making business changes due to lower revenue and higher expenses. One broker-dealer recently laid off employees due to a major slowdown in variable annuity revenue while another BD with a strong focus on alternative investments and REITs announced that 2017 would be break-even after years of consistent profitability; we see many broker-dealers raising costs or adding profit centers to help fill in the void. For multiple broker-dealers operating under a single owner, the temptation to cut costs by consolidating back-office services is nothing new but with the added expenses and revenue decline of DOL rules, consolidation projects appear to be hitting fever pitch (see Fighting the Big Profit Squeeze). Below we...
