Registered Rep.: What is the most important lesson from the market meltdown for financial advisors?
Roger Ochs: It's really about client communication. We're using regular conference calls, recording podcasts; we're sending out almost daily communications to advisors, which they can choose to forward to their clients.
RR: How would you define the culture of H.D. Vest?
RO: We're different than most firms: Well over 95 percent of our advisors are tax professionals, CPAs and enrolled agents who offer financial planning services as an adjunct to their tax practice. They generally have between 300 to 500 client relationships. On average, they're 56 years old, and 70 percent of them have been in the investment business less than 10 years.
RR: How does being a part of Wells Fargo influence the way the b/d is run?
RO: It really hasn't. We've been with Wells Fargo since 2001, but we've continued with the H.D. Vest brand. They've given us the financial stability to make the right investments in technology and training. Training is especially important for us since two-thirds of the advisors we bring on are brand new to the business. And obviously, with 5,400 advisors, you have to have technology to create efficiencies and provide them with practice management tools. They also have access to banking products, but it has to be part of a financial planning solution.
RR: What are the b/d's biggest business goals?
RO: Net new advisors are important to us. This year we will bring on 750; it's been between 750 and 1,000 over the last few years. We'd love to get to 10,000. There are 140,000 tax professionals out there, so the market is large. Same-store sales growth is also critical, as is revenue per advisor. For advisors who are not in training, average revenue per advisor is $60,000, but we have about 700 advisors who are doing north of $100,000. Last year, our same-store sales growth was about 22 percent. That's a pretty lofty goal — if we can continue with that kind of growth.
RR: What do you like most about the business?
RO: I really like working with our advisors. Our client base is mass affluent, which means those clients aren't always being helped. From that perspective, you get a lot of personal satisfaction from what we do.
Number of back-office employees: 314
Number of advisors: 5,400
Total client assets under management: $29.55 billion
Advisors' average length of service: 8.5 years w/H.D. Vest
Total revenue full year 2007: $230.9 million
Revenue from commissions: n/a
Revenue from fees: n/a
Average AUM per advisor: $5.51 million
Average payout per advisor: 74%
Average annualized production per advisor: $48,944
Number of dually registered reps: 2,011
*All numbers as of year-end 2007.
Registered Rep .: Primevest has a unique independent/bank model. Could you briefly describe it?
Catherine Bonneau: Primevest is a self-clearing b/d that manages investment advisory programs at approximately 600 banks and credit unions around the country. We provide them with turnkey advisory programs, technology and a broad product selection. [Reps affiliate with Primevest through their financial institutions.] We customize our approach, offering financial institutions everything from full-service private label programs to discount brokerage programs.
RR: Why would a wirehouse rep want to leave his firm and join yours?
CB: Because he wants a different business model, likes being associated with the brand of a regional financial institution and needs the support that comes with a large broker/dealer. The advisor also benefits from the built in centers of influence (attorneys & CPAs) aligned with the financial institution, gets access to local business executives through corporate lenders or trust officers, has branch “ambassadors” to help him build his business and can leverage the financial institution's marketing support. Because Primevest is part of the 8,000-rep ING Advisors Network, he also gets the kind of first-class technology and product selection that he is accustomed to at a wirehouse firm.
RR: What do you think are some of the challenges/stigmas that face the bank b/d world?
CB: The most egregious is that a bank rep is one who “couldn't make it” outside. Other myths include the idea that bank reps only have access to a highly restrictive product shelf and, as a result, have lower average production or fewer opportunities.
RR: What types of career paths does Primevest offer investment professionals?
CB: As a full-service broker/dealer, Primevest offers the full range of career opportunities from sales assistants, junior brokers, senior brokers, investment advisory reps and registered principals.
RR: The most expensive aspect of running your independent broker/dealer firm in 2008?
CB: Continuing investments in technology and infrastructure are critical to maintaining a strong broker/dealer. In support of financial institutions, the bar for bank broker/dealers is set high due to the commitment financial institutions have made in adopting technology. The best technology introduced in 2008 was a fully integrated, straight-through annuity processing system which is fully compliant with FINRA Rule 2821.
Number of back-office employees: 181
Number of advisors: 1,809
Total client assets under management: $26.98 billion**
Advisors' average length of service: N/A
Total revenue full year 2007: $108.1 million*
Revenue from commissions: $96.7 million*
Revenue from fees: $3.7 million*
Average AUM per advisor: $14.90 million**
Average payout per advisor: N/A (pay financial institutions who pay reps)
Average annualized production per rep: : $331,000
Number of dually registered reps: 760
*As of June 31, 2008
**As of September 30, 2008