| President of TD AMERITRADE Institutional Tom Bradley |
Q: What do you see as the biggest challenges for financial advisors in 2009?
A: Unprecedented market events have created a perfect storm for advisors. Their clients are experiencing severe asset declines—virtually overnight—and many firms are seeing revenue down 15 percent to 30 percent or more. At the same time, expenses haven’t come down and in fact, may have gone up due to more frequent client contact. For many advisors one of their biggest expenses is their people, and letting staff go is hard both from an emotional and operational perspective. Advisors have to do all they can to keep costs under control and reduce where they can. They also have to focus on bringing in new business, despite the uncertainty in the market. For those who can do this, there are actually many opportunities.
Q: How do you think the regulatory environment will change as a result of the near-collapse of the financial services industry and how will it affect financial advisors?
A: What’s important is that the regulators find a better way to uncover large problems that might be causing significant investor harm—such as a Ponzi scheme. Given the fact that some of the schemes were missed, and that we have a new administration in Washington, advisors can certainly expect to see changes in oversight and enforcement by the regulators, including the SEC and FINRA. I believe more targeted oversight is necessary as opposed to changing the existing regulatory structure.
Q: You've been in the business a long time. What advice can you offer to financial advisors who are considering a move toward independence?
A: Times are tough but perhaps the worst mistake advisors can make is to be complacent. This is a good time to be evaluating your options. The move toward independence can be extremely rewarding both personally and professionally. Advisors also need to assess their willingness to manage and run a business—do they have the entrepreneurial spirit to go out on their own? One of the main reasons advisors go independent is to have the full freedom to do what’s right for clients. Going independent can also help increase compensation and build equity. Advisors should also remember they aren’t fully alone and there are many options. Education about their options is important, as is due diligence, and then making sure they have support with the transition as well. We at TD AMERITRADE Institutional have a lot of experience helping advisors understand their options and helping them make a smooth transition.
Q: What are some positive steps advisors can take to advance their careers during this difficult juncture?
A: Investors have been hurt in this market and are feeling anxious. This is precisely why now—more than ever—they need the guidance of an independent advisor to keep their financial goals on track. Yes, this market is extremely difficult. But despite this market—and maybe even because of it —there are incredible opportunities to capture the money that’s currently “in motion” and help new clients meet their financial needs. If you are an RIA, you can market your fiduciary advantage, your ability to provide objective and unbiased advice, and your relationship with a well-respected custodian like TD AMERITRADE Institutional. All of these advantages should resonate well with new clients moving from a commission-based or product-oriented advisor or firm.
Q: How do you think the recession and upheaval in the financial services industry will affect the willingness of young recruits to enter and stay in the advisor business? What advice can you offer to new advisors who are just getting their feet wet?
A: This is a difficult time, certainly the most difficult that I’ve seen throughout my career. Yet, if you believe in America and in capitalism you have to believe we’ll pull through this. My advice to young advisors is that this is a great business and like most businesses you have ups and downs. I am very encouraged by the development of new higher education programs at colleges and universities incorporating financial planning curriculums and degrees, such as The Texas Tech University College of Human Sciences Personal Financial Planning (PFP) program. I would also recommend that new and established advisors take full advantage of the educational and training opportunities available at their firm, attend conferences organized by custodians like TD AMERITRADE Institutional or industry associations like the FPA or NAPFA. Also join local and national chapters. Also, I recommend networking with peer advisors. It can be a powerful development tool.
TD AMERITRADE Institutional, Division of TD AMERITRADE, Inc., member FINRA/SIPC.