If the IBD business is still in rough waters, why are most advisors singing their praises?

Philip Palaveev, owner and CEO of The Ensemble Practice LLC, believes the survey is a combination of objective feedback and some window dressing by advisors who filled out the survey. Some broker/dealers push out these types of surveys to their best clients, asking them to give them a good review, he says.

“It’s very clear that reps are trying to promote their firm and not necessarily giving a very objective measure of how well IBD doing everything,” Palaveev says. “They distribute it to their reps and they say, ‘You’ve got to give us a 10. If you have a problem come talk to us, but don’t give us anything less than a 10.’”

For example, many of the firms on the survey don’t even offer medical benefits, yet they are scoring a 5.0 or higher (out of 10) in this category, Palaveev notes.

Then again, if the adage ‘bigger is better’ holds true, advisors may simply be more satisfied because there are more larger firms in the survey. Most respondents were from large and mid-sized broker/dealers, which received high overall scores of 9.0 or more. Meanwhile, reps at smaller firms (those with fewer than 100 advisors) were the least satisfied group, giving their firms an 8.3 out of 10. (Still not a bad grade.)

Reps may simply be more concerned with running their own practices; the profitability of the home office may not even cross their mind, says Berkshire Capital’s Stern.

“The reps are concerned with how high their payout is and how good the technology is and how good the support is of the home office, etc., etc., and I’m not sure they think a lot about how profitable the firm is,” Stern says.