As margins have slimmed and the recruiting environment has grown more competitive, independent broker-dealers (IBDs) are increasingly fixated on building scale and creating volume at the expense of cultivating relationships with their independent financial advisors they serve.

With this shift towards growth for growth’s sake, the very independent advisors who chose this entrepreneurial path become a part of the crowd.

This commonly results in a substandard level of care and attention, as with each advisor added to any given platform, the advisors themselves become proportionately less valuable.

As we rethink how the industry should approach advisor-firm relationships, let’s consider the relationship that advisors have with their clients.

Good advisors spend a great deal of time getting to know each one of their clients, who they are and what’s most important to them. This is what allows them to construct, amend and fine-tune holistic financial plans.

Applying The Best Of Advisor-Client Engagements To Advisor-Firm Relationships

The best advisor-client relationships, however, take it to another level. The connection is close, personal and mutually beneficial for both sides, one that is grown atop a foundation of trust and respect.  

Nothing prevents broker-dealers and advisors from enjoying a similar bond. What we’re talking about here is celebrating independence while recognizing its limitations in the context of our industry by acknowledging this simple fact: broker-dealers and advisors are interdependent.

By celebrating and honoring this fact, rather than commoditizing it, one participates in what we call the “interdependent” model. 

Under this model, just as advisors have an appreciation of the hopes, dreams and motivations of their clients, firms strive to find out the very same things about the advisors they serve. Likewise, if the very best advisor-client relationships are bonded together by a shared faith in one another, then firms, working within an interdependent model, seek a similar partnership with advisors.

Going Beyond Surface Metrics

When this is the case, firms and advisors are invested in one another’s successes (when one does well, so does the other) and a partnership emerges that builds enduring value and long-term stability for all involved—the firm, the advisor and the client.

And, as a result, quantitative metrics like revenue and GDC, while important, don’t overwhelm other less tangible but arguably more important factors, such as the lasting impact firms and advisors, collectively, are making on the lives of those they serve.

Said differently, it becomes more about earning testimony, which is enduring, and less about winning titles, which are often fleeting.

This is not, however, where the industry seems to be heading today. Many BDs have adopted the “growth for growth’s sake” business model that minimizes their ability to have a meaningful relationship with the individual advisor, essentially morphing into service providers, delivering a menu of services for a fee.

Towards A More Meaningful Future Together

Every firm and advisor is in business as a means to their livelihood. There’s nothing wrong with that. Simply put, as an industry we must value and prioritize true relationship and impact over which firm generates the highest revenues or which advisor produces the most GDC. This is the essence of the interdependent broker-dealer model.

Bradley M. Shepherd is the president and CEO of Founders Financial, a broker-dealer based in Towson, Md.