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Independent broker-dealers expected to forge closer ties to advisors in 2024

On Behalf of | Jan 4, 2024 | Firm News

Independent broker-dealers are expected to forge closer ties with their advisors during 2024 as they continue to evolve, according to industry experts who spoke with

The IBDs that will thrive and stand out are those that are flexible and continually reinventing themselves, said Matt Lynch, managing partner of Strategy & Resources, a financial services consulting firm.  He said those that connect themselves to their advisors in the year ahead will stand a greater chance of success.

“A lot of the challenges, particularly for the larger firms, are to try to continue to have some sort of definition around what the affiliation with that particular firm means to a given advisor—the character, culture of the firm or how they’re really helping them with their growth of their business and remaining relevant to them,” Lynch was quoted as saying. reported that some IBDs have been taking ownership stakes in advisor practices in recent years, including Osaic which became a minority investor in hybrid RIA Signature Estate & Investment Advisors. In addition, LPL expanded its liquidity and succession offering to unaffiliated advisors, a program in which the firm acquires firms where principals are approaching retirement and grooms younger leadership for the future. More recently, Cetera announced minority investments in Prosperity Advisors and NetVEST Financial while acquiring The Retirement Planning Group.

One concern, particularly for larger IBDs, is finding ways to prevent advisors from departing for more lucrative opportunities.

“To stop any kind of bleeding, firms have got creative to say, ‘We have all this capital, what should we do with it?’ And if they invest it into purchasing a percentage of an advisor’s practice or large OSJs’ practices, I think it’s all about keeping people with them so that they don’t lose assets,” said Jodie Papike, CEO and managing partner of Cross-Search. “And it also gives the advisors in the situation some capital to do whatever they want with it without having to make a move.”

Simon Hoyle, owner of IBD and RIA recruiting firm RIA Choice, said he expects more IBDs to reduce and possibly eliminate some practice-related fees this year as part of their efforts to remain competitive as well as outsourcing some of their technology functions.

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