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Which BDs Are Weakest, Strongest in Bad Markets?

15:32 25 September in Articles Written by Jon Henschen by rafferty

September 24, 2020 By Jon Henschen, ThinkAdvisor When advisors shop for a new broker-dealer, the thought of bear market vulnerability is rarely on their radar — but it should be. Between 1926 and 2017, we’ve experienced eight bear markets. Their duration ranged from six months to 2.8 years, while the severity of the decline varied from about 22% to an 83% drop in the S&P 500. The 1973-1974 stock market crash was an especially deep correction, with the market losing over 45% of its value. (The crash came after the collapse of both the Bretton Woods system and the Smithsonian Agreement, causing deep dollar devaluation.) For broker dealers, the 1973-1974 crash was extremely tough. As Raymond James explains on its website, “During the economic downturn of 1973 and 1974, with the survival of the firm...

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Avoid Guilt by Association

17:26 12 March in Articles Written by Jon Henschen by rafferty

March 12, 2018 By Jon Henschen, ThinkAdvisor ‘Clean advisors’ can and should avoid ‘dirty broker-dealers’; do your homework to avoid big headaches. As an advisor, you relentlessly perform risk assessments for your clients’ portfolios. Yet, one aspect of risk assessment you may ignore is the downside of being an advisor with a clean compliance record who is tied to a broker dealer with problematic compliance and financials. Compliance issues at the broker-dealer level are an area of concern rarely explored by advisors, but they should be. Is your broker-dealer home to a high number of advisors with numerous compliance or credit disclosures? As the Financial Industry Regulatory Authority drills down on anything and everything, a broker-dealer in poor standing with FINRA can make life more difficult for all its advisors — even if you may...