In order to really benefit from any broker-dealer relationship, advisors should be open to new ideas and willing to invest the time in the resources that your broker-dealer has available. They put a lot of thought, money and talent behind their value-added services, only to be ignored, intentionally or otherwise, by many of their advisor clients.

An interesting fact that should catch the attention of any advisor is that the most efficient practices from a scale, size and profitability perspective are often the highest users of the services available at the broker-dealer. Those who do not adopt and utilize the services of the BD are often bottom-quartile advisors who are not profitable or efficient for the BD or themselves.



By now, the question you may be asking is, who needs a broker-dealer anyway? The answer comes in several parts. The easiest answer is that those advisors who will do any commission-based business must have a securities license and be registered with a broker-dealer. For those not engaged in commission business, you may or may not need a BD. If you oversee or manage assets for clients, you will definitely need a custodian. That custodian is a BD, but not one where you'll need to be registered or licensed with them. You are simply using them to custody assets, prepare statements, execute trades, etc., under your direction. If the planning practice is purely advice and guidance, with no BD or custody needed, you don't need a BD and this information is something you may be able to use in your bigger, better future.

The first part of making the most of your BD relationship is to be sure that you've chosen the right one in the first place. This starts with an accurate assessment of where you are and where you want to go. Until you know where you want to go, any firm can do the job. But once you've articulated a solid business plan and you've highlighted the tactics that need to happen to get there, you can begin to benefit from what a BD may have to offer.

Your diligence needed to get the most from your BD is to be aware of the services that they may provide. Start by identifying which services are pure table stakes, the bare necessities for a BD to compete and truly add value. Any firm can clear trades, provide custody and statements, compliance oversight and the day-to-day necessities of an advisory practice. But finding a BD that meets your unique needs will take some work.

This is not a quick process. In a recent discussion with the largest independent BD in the U.S., I was told that they frequently get asked for technology and services that already exist. The statistics on utilization of some of their more robust services is once again skewed in favor of the larger, more profitable practices. The issue for many is a little like the chicken and the egg story, but with a clearer methodology to decide what comes first.

What must come first is a complete understanding of all of the services offered by the firm. This can take months, or even years. We all have busy lives. Work, family, fun and sleep consume nearly every minute of your 168 hours each week. But successful advisors make the time to evaluate the services offered by a BD and match those closest to what they need.

To do this, you will need to attend their conferences and visit their home office or your local "office of supervisory jurisdiction" or relationship manager. These are the best candidates to start down the path of awareness of the services. Ask them for a concise list or explanation of the services they feel are most appropriate for your business. Ask them for the names of other users of these services and actually meet or talk on the phone with them.

Include your staff in these discussions. If you don't have staff, that could be another problem; it's very difficult to serve clients at the highest level as a one-person band. In fact, for those with a great assistant, put them on the front lines of evaluating the BD's value-added services. Include your assistant in the evaluation process and ask them to be accountable for your adoption and utilization.



Given the unique nature of a CPA financial planning practice, one of your more important considerations may be the culture of a prospective BD. Many CPAs would be uncomfortable being a part of an organization that was dominated by a sales culture, rather than a service culture.

As you attend firm events and conferences, many CPA financial planners want to know that there are others in the broker-dealer field with very similar circumstances, challenges and opportunities. Learning from your peers is a big part of the maturation process as a CPA financial planner. You also want to assess whether the BD understands your culture, and that they are able to support your specific needs. There are both BD and RIA firms that have the niche specialty of building a vibrant wealth management process inside or alongside of a CPA firm.

Learn about the profile of the prospective firm's existing rep base. Ask for the types of firms that they work with, whether they are large or small. Ask for average revenue statistics per registered rep of the BD, along with a breakdown of that revenue by lines of business, such as brokerage, insurance-based products, funds and managed assets. Any information that they give you may be generally corroborated with the publications that offer statistics and sometimes ranking of BDs. After a conversation with a few, it should be fairly clear who may be able to help and who doesn't have a clue what you really do for a living and how you want to get there. Also, ask to attend one of the their conferences and see how you fit in with the reps that the firm has recruited in the past.

Another material consideration is the level of support that you may need and the level of support offered by the BD. Support can come in many ways. You may need help with training, marketing and proactive business development, succession planning, transition assistance, technology and expertise.

One of the biggest disappointments of many CPAs who entered the financial planning and securities world over the past decade is what I call the "Field of Dreams illusion." That illusion being that many CPAs-turned-planners thought that all they had to do was build that practice and clients would flock to it. In my experience, many of the less savvy communicators have either left the FP business or are still fledgling planners and on the low end of productivity and profitability 10 years later. In my opinion, a good CPA practice should be able to cause revenues from planning to equal or exceed the revenue generated from the tax department within three years. I believe this because I did it myself in the 1980s and have since mentored many others to equal or greater success.

There are two levels of training that may be important to you. First is with respect to the specific systems and processes of the prospective BD that you'll need to use in order to do business. Online training is great, but there is no substitute for a real live person who can hold your hand through real-time training. Without both good training and good documentation to refer to about the systems and processes that you'll use every day, you'll be wasting a lot of time.

You may also be looking for some sort of technical or professional training, including CPE or CE credits. Ask to see the firm's catalogue of courses or a sample of an agenda from one of their most recent meetings. The better firms offer so much in the way of training that you'll need to attend fewer third-party educational sessions, saving both money and time.

Marketing and business development training and resources may be the most important part. By now, you are either a great marketer or not. Many CPAs, unfortunately, are not. But marketing and creating awareness to your existing clients and your centers of influence about this valuable service is significantly more important than many CPAs want to believe. Just ask the top performers how they got there, and good communications are always a big part of it.



Succession planning is an issue plaguing all professions, especially in the CPA, insurance and financial planning worlds. This is something that needs advanced thought. If your financial services practice is very successful, and you do not have a written succession plan in place upon your passing, the results may be disastrous for any heirs that may have counted on revenue from the sale of your practice. Because of the tight regulation of RRs and BDs, getting this done right can make a world of difference. Find a broker-dealer that understands this and has done it for other advisors.

Transition assistance is another slippery slope. Every BD will tout the transition experience of joining them and transferring client accounts with ease. For many, nothing can be further from the truth and the only way to feel good about your assessment of a firm's transition assistance would be to talk to reps who have recently transitioned to the BD that you are considering. Evaluating their technology may be the most difficult part of the process. The promises made by some BDs may be far apart from the experience of their advisors. Evaluate whether the technology is proprietary or made up from systems provided through a custodian firm and shared by many different BDs. Ask users who have transitioned to your BD of choice how they like the technology and whether it compares favorably to what they were told and what they wanted or had previously.

Expertise is also a very significant factor for CPA FPs. Access to subject matter experts that you do not have in your firm can be a tremendous benefit. Design a tasteful marketing and communications plan to make sure that your newly formed deep resources are not the best-kept secrets among your clients and centers of influence.

Making a plan to get the most out of your BD is not only healthy, but something craved by the BD themselves. Don't be a short-sighted bean counter here. The English translation of that is don't be cheap and don't say that you don't have the time to get better from greater utilization of the BD services - unless of course, you really do not want to get better.

John P. Napolitano, CFP, CPA, is CEO of U.S. Wealth Management in Braintree, Mass. Reach him at (781) 884-2390.

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