In a moment, we’ll share with you twelve critical questions to ask your new, prospective firm. Whether you are thinking of changing your independent broker-dealer, IMO/FMO, RIA, or TAMP platform, these questions go far beyond what many advisors normally ask.
The typical advisor questions include the “obvious” items:
- Culture. While it may be difficult to discern what the “culture” is like at the company by just asking a few questions, you can usually identify this by talking with other affiliated advisors and/or visiting the firm before making the decision. If the home office culture is one that fits you, that’s a great first start.
- Length of tenure for team members. If employees stick around for a while, then it’s likely that the employer treats their people well. This can also be reassuring that you aren’t working with people with limited experience and knowledge in the firm.
- Regulatory history. This one is simple. Ask about their regulatory history (you can also do the homework yourself these days). Don’t forget that when you saddle up with a broker/dealer or RIA, you’ll likely feel the same regulatory “bumps in the road” that they do. Just ask any rep whose firm caught negative press over the past 5-10 years. Or worse yet, if the firm all of a sudden went out of business.
- Payouts. More often than not, payouts are the first thing an advisor looks for when they are considering making a move. While payouts are important, don’t get caught with your “payout” blinders on as you are making a change. If a firm can help increase your production and make your life easier, it might be worth giving up a percentage or two.
- Costs. You’ll want to make sure you are aware of the costs associated with doing business. Different costs may include E&O insurance, affiliation fees, compliance fees, technology packages, and trading costs. Do your homework in advance so there aren’t any big surprises.
- Average rep. revenue. You’ll want to make sure that you are aligning with a firm that can support the type of representative you are and plan to be in the future.
These are the obvious items that most advisors are prepared to factor in as they consider a new firm. However, in our experience, we’ve seen a number of advisors fail to ask the following (equally as important) questions.
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