2. CURRENT ENVIRONMENT
Erosion of the faith in large financial institutions
⇒ Clients are willing to look at independent firms.
Evaporation of investment banking trading and other revenue sources
⇒ National Firms need to squeeze more profits from retail operations. (i.e. Fee creep)
Distribution is the precious commodity
⇒ Financial products are widely available and competing for shelf space.
3. YOUR DEALER IS NOT AN EMPLOYER
It is a Service Provider of:
Technology
Back Office Services
Financial Offerings
Compliance
4. WHAT IS YOUR DEALER COSTING YOU?
Lower Income
- % of Commissions
- Mark-ups and administrative charges
Taxed as an Employee rather than a Small Business Corporation
Lower Value of Business On Retirement
Loss of Control
- The dealer is responsible for approval of financial products,
internal compliance and risk management policies, etc.
5. DEALERSHIP WITHDRAWAL SOLUTIONS
Exempt Market Dealer & Referral Arrangement with a Portfolio Manager
Portfolio Manager & Sub-advisory Relationship with a Portfolio Manager
8. EXEMPT MARKET DEALER SOLUTION
PROs:
- Faster and Cheaper to Establish
- Download significant sales compliance risk to the Portfolio Manager
•
CONs:
- Client has a direct relationship with Portfolio Manager
- Limitation on Sales Rep’s interactions with the Investor Client
9. PORTFOLIO MANAGER SOLUTION
PROs:
- Maintain full control over the client relationship
- No restrictions on client communications
•
CONs:
- Cost of engaging a supervising portfolio manager
- Directly responsible for all sales compliance related matters
10. FIRM BUILDING BLOCKS
Compliance Support
Portfolio Management
Correspondent Services
Technology
> Ara Compliance Support
> TBD
> TBD
> TBD
11. KEY CONSIDERATIONS
Communicating with and retaining clients
Establishing an account documentation and transfer strategy
Transferring historical account data
