Small Broker/Dealer Feedback...

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Sampson's picture
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Joined: 2007-04-03

How do you guys feel about small, independent B/D's as a whole??
I have a good friend who opened his B/D 2yrs ago and has almost 70 reps now (all over 100k in production) due to their technology, ease of compliance, small town feel, etc...
He says the reps swear by his service. Are you guys pro or con when it comes to joining B/D's that size? And why??
Good forums btw. Been reading for awhile and decided to register today. :)
 
-Samps

troll's picture
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Joined: 2004-11-29

The question is "Capital Requirements".
How is the doing his clearing? Who is custodian of his funds? What happens if there's a crash?
These are not small issues but they don't seem big in a rising market. In '87 there were a whole slew of firms that were strong in September and didn't make it to November because they didn't have the capital to be compliant in business.
I don't wish the guy no bad luck, baby, but I'll take harder compliance to have a stronger business partner. 

troll's picture
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Joined: 2004-11-29

Didn't mean to mix my "compliance" metaphores there. I know there's a difference between the two.
Sorry.

Sampson's picture
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Joined: 2007-04-03

I agree with you. Net cap is an issue which should be considered strongly. Believe it or not, most of the people I know in this business don't even ASK about the firm's net cap prior to affiliating.
I believe the firm he has is sitting at about 3 mil in net cap.
I would have thought that a small B/D would have no chance to compete in the market share but my friend Tony had a good point.
He said that even the LPL's of the world were, at one time, 70 man B/D's...
Can't believe all the views on this post and yet only 1 response...
 

silouette's picture
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Joined: 2007-03-13

With all respect, rrbd, don't think the b/d industry will lie down and die. Bottom line, individuals will continue to need to be persuaded to form their own personal capital, and someone will need to be paid well to meet that need.
The Spitzers will continue to run for president like Edwards, and in the end personal ambition will be exposed.
Albeit the pendulum will continue to swing, and it may get a lot worse before it gets better from here.
Globalization killed the small candy store, but I think the capital formation story is also about expanding opportunity and relative peace on the geo political front.
But like a billy club to the head, future global geopolitical events will ensure the U.S. capital markets their rightful place as THE core holding in any investment banking portfolio. Just check out the temerity around Iran if you don't believe it.
And our generation will become too tired to fight but the next will enter the battles that will continue to yield the principle ingredients of success: freedom, real estate, innovation, mobility and such.

vbrainy's picture
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Joined: 2006-07-26

Not for me.  Not for my clients.  Why try to reinvent the wheel?  AGE or RJ will give you that small feel WITH a big name for your clients and WITH tons of support.

Sampson's picture
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Joined: 2007-04-03

Certainly a difference of opinions here. Thanks for the responses!
I have to say that I believe, regardless of if you're selling traditional or direct products, that your clients believe in YOU'RE ability more than the name of your Broker/Dealer.
While the MetLife's, PacLife's, Wachovia's, of the world are buying up independent B/D's like they're gumballs, there is still a need for personalized relationships between the broker/planner and the B/D.
RJ and AGE have been fined HEAVILY over the past few years for a reason. Lack of attention as to what is best for both client/rep.
I'm going out on a limb here and do not like "Throwing stones" but I believe it to be the truth and that's what forums are for. haha
I just think that while it IS harder for smaller firms to afford today's compliance, it is also possible to succeed if they are willing to take the time to really help us build the business.
I feel this way because I have spoken to about every B/D Owner and recruiter in the business at one point or another.
Small, Independent owners of Broker/Dealers have a very different opinion of what service and support should be to both client AND representative. :)
Thanks again for keeping this thread going. Interesting opinions!
 
Samps

FreeThinker's picture
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Joined: 2007-04-16

Seems to me that a good question to ask is what is the BD going to do for you to put clients in your pockets?  Big or small, they all have issues and all will fail at some level of support when you need it most. Saying it is one thing and doing it again and again and again is another. Since they all will make mistakes I would rather go with the one that gets me clients. Any of those out there?

FreeThinker's picture
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Joined: 2007-04-16

To actually answer your question, for the guy that wants complete independence the smaller BD would make sense if they can bring fulfillment.  For the guy that wants resources the bigger BD would make sense as long as they don't get strangled.  For me I am still interested in getting new clients.

bXpress's picture
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Joined: 2006-10-09

If the small b/d can have the products, technology and service, it can be a great move.  Not all can deliver on the three areas.
The small b/d, if they are smart, spend hours listening to their reps and the reps get involved with enhancemnts. 
It is not for everyone.  But for those who feel that they want to have a part in the direction of the company, and that's important, then it can be a great place to build a business.

Sampson's picture
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Joined: 2007-04-03

bXpress wrote:
If the small b/d can have the products, technology and service, it can be a great move.  Not all can deliver on the three areas.
The small b/d, if they are smart, spend hours listening to their reps and the reps get involved with enhancemnts. 
It is not for everyone.  But for those who feel that they want to have a part in the direction of the company, and that's important, then it can be a great place to build a business.

 
I feel the same. That's why I was asking to see if I was the only one out there! haha
Thanks for the comment. :)
 
Samps

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