Moving Chess Pieces

This is a great year to be looking for a new independent broker-dealer.

Shake-ups continue to embroil the space. Large and small advisory firms and independent advisors are jumping ship from their old firms to find new independent broker-dealers to assist them.

And the leadership at large broker-dealers looks like a constantly shifting chessboard, as executives are poached by rival firms. Add to that the fact that broker-dealers’ fees are being compressed and they face changing regulations. That’s a lot of changes to keep advisors and firms on their toes.

Jodie Papike, executive vice president at Cross-Search, an independent broker-dealer advisor and executive placement firm, says it’s a good market for those advisors looking to move.

“Broker-dealers are offering up-front money, enhanced payouts and picking up expenses. It is a very competitive market for broker-dealers. When selecting a broker-dealer, advisors have to decide how much independence they want” and how big a broker-dealer they want to associate with, she says.

As the space becomes more competitive, the offers to successful advisors become more lucrative. Individual IBDs do not like to say what specifically they are offering, but the incentive packages, including forgivable loans, are beginning to raise eyebrows.

The influence of private equity firms circling around independent broker-dealers is also being felt. The U.S. is still one of the few safe havens for investments, and private equity firms are looking on it favorably and making what seem like rich offers for IBDs.

Because of Donald Trump’s unexpected win in the 2016 election, private equity firms see this as an industry likely to benefit from deregulation. That will also improve the investment picture, they say.

In this new regime, larger broker-dealers will get bigger. Smaller broker-dealers will serve niche advisory markets. As far as midsize IBDs, there’s disagreement about whether there will be room for them in the industry in the future.