Independent B-Ds Inside
Independent broker-dealers think they have a good business model that works in the best interests of their clients. But does the general investing public even know what independent B-Ds are, what they do and why they're different from other people who call themselves advisors?

That was the gist of a well-attended session at the Financial Services Institute's national conference in New Orleans in late January. Entitled "This Is Our Time: Branding the Independent Channel," the session's premise was that the independent B-D and advisor channel might be "the best-kept secret of the last 40 years."

And given the upheaval in the wirehouse space during the past couple of years, now's as good a time as any to grab the bullhorn and tell the world what the channel is all about and what it has to offer both to investors and to advisors dissatisfied with the wirehouse model.

But first the industry needs to answer the existential question: What's the independent broker-dealer all about? The industry generally wins favor, said the panelists, for its objectivity, its integrity, the choice it offers clients through non-proprietary products and the personal service it offers. On the other hand, the industry comprises small players and is too local, and it's not considered the place to go for high-net-worth clients.

"According to investors, independence means not being affiliated with any brand name," said panelist Ruth Papazian, executive vice president and chief marketing officer at LPL Financial.

But at the same time, she said, investors also perceive strength in a brand name. "This need and desire for a brand, perhaps a brand of a different type, is what our opportunity is all about."

The key elements of a brand include a strong value proposition, visual identity and a simple, crisp and consistent message. The panelists mentioned some branding concepts that proved immensely successful, from the "Intel Inside" campaign, which boosted the credibility of smaller computer makers associated with that brand, to the Independent Insurance Agent logo that provided identity to smaller insurance brokers back in the day.

Eric Schwartz, the CEO of Cambridge Investment Research, said that an independent B-D brand could appeal to both clients and advisors disaffected with the wirehouse model and attract them to the B-D firms.
Another benefit of branding, he said, is that it would help regulators better understand what the independent B-D business model is about and create better regulations.

"This is what FSI is trying to do," said Schwartz, a member of the organization's executive committee.

One audience member asked about the costs involved in launching a major national brand-awareness campaign. Schwartz said the intent is to do something on a grassroots level. For example, he said, if the collective FSI membership chipped in even just a couple of dollars per member, it could build the foundation for an effective awareness-raising campaign.