Is Your Broker-Dealer Firm Future-Proofed?

Is Your Broker-Dealer Firm Future-Proofed?

Millennials are currently the largest generation in today’s workplace. Many of them are ambitious, tech-savvy and driven to succeed, making them possible assets to any organization. However, if your firm is struggling with attracting and retaining millennial advisors, there’s a good chance you’ll miss out on this rising talent pool. 

In this article, we share what we believe to be a potentially winning strategy for retaining them by offering what they want—while still keeping your business strong.

Please explore with us below:

  • The importance of future-proofing your firm
  • How an outsourced chief investment officer can help
  • What next-gen advisors need in order to thrive
  • An OCIO model’s potential advantages
  • A possible upside to today’s market volatility

Keep Your Balance

As a broker-dealer firm, you’re tasked with providing multiple clients with the most personalized service possible. You want to deliver maximum reliable value by getting them the best investments while also providing the right amount of guidance. This can make meeting every clients’ needs a balancing act (before you even factor in employee retention issues).

Nevertheless, getting millennial team members’ buy-in is important to your future—and that makes reconciling the needs of both vital. Without sacrificing the quality of your asset management and financial planning or neglecting client retention, you need to set clear expectations for your team and build a solid communications culture. 

You also need to give next-gen advisors opportunities to lead and provide flexible enough work hours to support a healthy work-life balance, at the same time. Walking this tightrope may sometimes feel like a tall, stress-inducing order. Additionally, as a smaller firm, if you lack the funds for a new full-time hire, there are days when it feels humanly impossible. 

The upside is that you don’t need to clone yourself to handle it all. We believe there is a solution that can help you cover all these bases well without sacrificing anywhere—or even bringing another employee under your roof: an outsourced chief investment officer (OCIO).

This executive can help by providing investment consulting and Reg-BI-compliant record keeping, both of which can free you up to better meet the needs of your clients and your team. However, you don’t have to provide benefits, bonuses, or even a physical desk to work at: Their involvement is generally all virtual (e.g., through Zoom). 


Could the Right OCIO Help You Succeed Amid Increasing Competition? 


Leverage the Advantage

At the same time, an OCIO actually joins your team. In other words, you can list their bio on your website’s About Us page. As a result, assuming you outsource a quality CIO, their accreditation, experience, and ongoing educational accomplishments can bring a great deal of prestige to your firm. Possible side effects of these additions can include improved retention of more-impressed clients and motivation to optimize your fees. 

We cannot offer any more guarantees than you provide. However, there’s a lot to be said for bringing an impressively-credentialed, well-experienced executive onto your team: Wise investors, particularly HNW individuals, often do their homework before committing to work with an advisor. When they see a powerhouse within your ranks, they could be more likely to sign on. 

A case could even be made that you should consider raising your AUM—because HNW prospects impressed by your fiduciary OCIO’s prestige will expect higher numbers. Again, this isn’t a promise, but it’s not exactly unheard of, either. 

Records of Excellence

An outsourced CIO can monitor the trades made by each assigned broker-dealer employee, helping to ensure that your firm is compliant with Reg BI. The importance of meeting the SEC’s regulations almost goes without saying. That’s why an optimal OCIO will keep meticulous records to help you stay transparent and accountable. 

Increasing federal scrutiny means you never want to lack documentation proving your firm is completely above-board. Better-safe-than-sorry might be an old cliché, but the phrase’s longevity suggests the wisdom still behind it, even today. 

Experienced Insight

Today’s market volatility is no secret: Investors are antsy, surrounded by gloomy news, looking for reassurance, and—in some cases—ready to blame their advisor for the inevitable effects of the economic weather. Put another way, a sizable chunk of the financial industry’s clients may be switching advisors soon, if they haven’t already. 

Some will try to go it alone first… fail… and then seek a new RIA to work with, but you get the idea. There are two potential ramifications of this exodus: 

  1. You can’t afford to drop the ball, where retention’s concerned. If anything, you need to redouble your (metaphorical) hand-holding efforts when investors are nervous. Leveraging every viable option to reassure them is critical.
  2. Other (maybe even your competition’s) clients are up for grabs. For shrewd broker-dealer firms, this isn’t just time to batten down the hatches. It’s time to lower the nets, as well. 

Why be content with damage control when you might be onboarding new faces, as well? With nothing personal against your competitors, business is business. You’ve got bills to pay of your own—and if their losses can be your gains, that’s a no-brainer. 

Call in a reputable professional with the horsepower and experience to help you play your A-game: The right OCIO can utilize technology and data to support your decision-making. After all, nobody knows volatility like an executive who’s managed various clients’ investments through multiple seasons of it. 

Outsourcing a fiduciary CIO makes sense monetarily, procedurally, and accountably. You can focus on your clients, your business, and on your team. You can also keep a closer eye on the overall health of the firm as it grows. 

Make It Happen 

future growth of firm

Obviously, millennial advisors are an extremely important part of your business and the industry as a whole. As their needs change, it’s increasingly important to make sure that your firm is ready to adapt and meet them. So, utilize tools and resources like a well-selected OCIO to help you stay competitive.

Cornerstone Portfolio Research is ready to partner- up and grow with you, adapting to help you meet the requirements of your independent broker-dealer firm and its clients for years to come. Our investment support is pain-free; carefully developed to reduce hassles and make things easier. 

We take pride in maintaining consistent transparency and accountability that you and your clients can rely on. Contact us to learn more.

CPS eBook Reasons to Outsource

More about the author: Thomas Balis

Thomas holds a Bachelor of Science in Business from Ohio State and has since earned the Chartered Financial Analyst® (CFA®) designation as well as the Accredited Portfolio Management Advisor (APMA®) and Chartered Mutual Fund Counselor (CMFC®) certifications.