Your clients will get the following letter when you change to a new firm:

Issues to consider when your broker changes firms
You’re receiving this notice because your broker has changed firms. If you’re thinking about whether to follow your broker or stay with your current firm, it’s a good idea to examine key issues that will help you make an informed decision. A good relationship with your broker is surely valuable to you, but it’s not the only factor in determining what’s in your best interest.
Before making a final decision, talk to your broker or someone at your current firm about the following questions, and make sure you’re comfortable with the answers.

Could financial incentives create a conflict of interest for your broker?
In general, you should discuss the reasons your broker decided to change firms. Some firms pay brokers financial incentives when they join, which could include bonuses based on customer assets the broker brings in, incentives for selling in-house products or a higher share of commissions. Similarly, some firms pay financial incentives to retain brokers or customers. While there’s nothing wrong with these incentives in either case, they can create a conflict of interest for the broker. Whether you stay or go, you should carefully consider whether your broker’s advice is aligned with your investment strategy and goals.

Can you transfer all your holdings to the new firm? What are the implications and costs if you can’t?
Some products, such as certain mutual funds and annuities, may not be transferable if that’s the case, you’ll face an additional decision if you follow your broker to the new firm: whether to liquidate the non-transferable holdings or keep just these holdings at your current firm. Either way, there couId be costs to you, such as fees or taxes if you liquidate,
or different service fees if you leave some assets at the current firm. Your broker should be able to explain the implications and costs of each scenario.

What costs will you pay, both in the short term and ongoing if you change firms? In addition to liquidation fees or taxes if you sell non-transferable assets, you may have to pay account termination or transfer fees if you close your current account , or account opening fees at the new firm.(Even if the new firm waives its fees as an incentive to transfer, that wouldn’t reduce any transfer or closure costs at your current firm.) Moving forward, the new firm may have a different pricing structure for maintaining your account or making transactions (such as fee-based instead of commissions ,or vice versa),which could increase or lower your account costs.Your broker should be able to explain the pricing structure of the new firm and how your ongoing costs would compare.

How do the products at the new firm compare with your current firm?
Of course, not all firms offer the same products. There may be some types of investments you’ve purchased in the past or are considering for the future that aren’t available at the new firm.
If that happens, you should feel comfortable with the products they offer as alternatives If you tend to keep a lot of cash in your account, ask what investment vehicles are available at the new firm for the cash sweep account and whether the interest rate would have an effect on your return.

What level of service will you have?
Whether you follow your broker to the new firm or choose another broker at your current firm, consider whether you’ll have access to the types of service, support and online resources that meet your needs.


Excluding the players in the World Series, there are many contenders for a baseball list that no one wants to be a part of…..

The toughest question for the general manager of any baseball team is whether to pull the trigger and offer a player coming off a big year a huge contract. No matter what fans think there’s no way to tell for sure if a player will continue at the top of his game after re-signing. The World Series features two teams, the Kansas City Royals and the San Francisco Giants, who eschewed off-season splurges and relied on smaller contracts and young, untested, players — particularly the Royals.

Read full article here.


A $150 million book of business Wells Fargo promised him never materialized — and then the wirehouse took him to arbitration…..

A wirehouse promises a veteran advisor a $150 million book of business and a $450,000-plus upfront bonus to come on over. The wirehouse resigns the FA’s job for him at his current firm, then e-mails his clients to tell them he’s leaving.

This strange and unusual real-life scenario begins to boarder on the bizarre when the book of business turns out to be only $10 million and five months after the advisor joins the firm, the wirehouse takes the vexed FA to arbitration by the Financial Industry Regulatory Authority (FINRA).

Read full article here.


Advisory firms and recruiters weigh in on their 10 best interview questions and answers when hiring advisors.

What can you tell me about yourself?

Mickey Wasserman, founder and president of Michael Wasserman & Associates, Agoura Hills, Calif.

“Perhaps the oldest job interview question, but it’s still the most powerful. While prior measured accomplishments are the best predictor for future success, this open-ended question separates the great FA from the merely good FA. A good response gives me a glimpse of the candidate’s poise and communication skills. I want to learn about their work ethic, vision, passion, family, humility, community involvement, goals, stability, etc. The best response includes language about serving clients. The worst response is non-communication, uncomfortable silence, folded-arms, and defensiveness.”


See full slide show here.


There are over 1,000 independent broker-dealers out there, notes Ned Van Riper of So how do financial advisors decide which one to go with?

Van Riper notes that many advisors will choose a broker-dealer based on things like going with the first recruiter who calls, or checking an industry publication to see which one ranks highest on some metric like which one has the most advisors.

He says that unfortunately, some advisors go with who offers the biggest financial reason, even though this could tie them up financially with the broker-dealer even though it doesn’t ultimately work for them. Van Riper writes that “reality hits advisors after 12 months and they realize they affiliated with a firm whose culture, strategic direction or business mix does not align with their own.”

Instead, advisors should look for the broker-dealer that best fits their own vision. The author says that it is important that advisors do their homework, much like their clients do their own homework on hiring advisors, to find the best broker-dealer for themselves and their own clients.

Written by Lisa Swan


There is a pact that many broker-dealers have regarding protocol during recruitment. But Investment News reports that some are breaking away from the deal.

In the protocol, which has 839 members, it “permits individual advisers to take basic customer contact information when they move from one protocol signatory to another,” Investment News says. The pact was started by Citigroup, Merrill Lynch and UBS Financial Services in 2004, and the idea is to stop disputes over non-compete clauses.

Just in 2009, 278 firms signed on to the deal, a record, but the pace of companies signing the pact has slowed. This year, only 100 companies have signed on, and 162 agreed to the deal in 2011. In addition, some companies are breaking away from the pact. Focus Financial Partners, Buckingham Asset Management and Sigma Investment Counselors have all pulled out of the pact in recent months.

Adam Birenbaum, CEO of Buckingham, said that “we’re focusing on the RIA space, so we just didn’t see a need or value in being part of it.” And Robert Bilkie, head of Sigma Investment Counselors, said: “In 40 years in the business, we never hired someone who had worked before as a broker,” so they no longer felt the need to stick with the pact.


There are approximately 11%fewer broker-dealers now than there were in 2007, according to a new study. However, the pace of broker-dealers has been slowing since last near.  Investment News says that the Compliance Department, a consulting organization, discovered that 93 broker-dealers closed in the first quarter of 2012, while 137 did the year before.

In addition, there are more such businesses closing than opening their doors. In the first quarter of 2012, 44 broker-dealers opened their doors, which is fewer than the 57 who opened for business in 2011. And the Financial Industry Regulatory Authority (FINRA) there were 4,428 broker-dealers in existence as of March 2012, which is around 11% fewer than the 5,005 open in 2007.

David Alsup of the Compliance Department told Investment News that he didn’t “see an end to the steady downtick” of broker-dealers’ shutting their doors, “and I don’t see an uptick for a while. He indicated that the increasing regulation of such businesses was hurting the small broker-dealer. “You just can’t be a two-man shop and hire a $70,000-per-year compliance officer and stay in business,” he said.

On a more positive note, Alsup told Investment News that around 10 broker-dealers were shutting their doors each month, which is slightly smaller than the 12 a month closing a month in recent years. He said that was due to an increase in trading and the economy improving slightly.

Written by Lisa Swan


LPL Financial LLC is going to have to raise some fees for its brokers next year. reports that the firm’s fee increases will cost each of their representatives an average of $1,050 starting on New Year’s Day 2012. said that LPL informed the 12,799 brokers that it would increase fees in 2012 “in three categories, including errors-and-omissions insurance.” The most controversial fee added is an additional $50 per month, or a 40% increase, for an “adviser affiliation fee,” raising the charge up to $175 a month. This could result in “$13.4 million in extra revenue for the firm next year,” the article notes.

One adviser complained to about the affiliation fee. “I don’t get it,” an LPL broker said. “I understand [an increase] for errors-and-omissions insurance, but it’s another $50 per month to be affiliated with LPL.”

Bill Dwyer, who is LPL’s president of national sales, defended the charge. “That fee hasn’t gone up since 1984, and along the way, we’ve built up business tremendously.” He said that over the years,
“LPL has raised payouts and passed through some costs, but we believe we have the most effective pricing model in the business.”

LPL is also lowering some charges, such as the Strategic Asset Management charge, which is being lowered from $15 per transaction to $9.

Written By Lisa Swan