Financial Blog

How to be an elite OSJ

Financial Planning spoke to Bill Butterfield, senior analyst for Aite Group, for his insights on what it will take for OSJs to become industry elites.

Take care of advisers tech needs - beyond what the IBD does.

Independent broker-dealers typically provide advisers with work stations that are integrated with leading CRM systems. But IDBs usually arent deeply involved with tech training and support, says Butterfield, author of a recent Aite report The Evolving OSJ: Emerging Business Models.

In addition to providing tech training and support, OSJs who want to be industry leaders should license tech applications on their own, suggests Butterfield.

These OSJs are doing more than helping advisers get the most out of the tools and the technology that the broker-dealer offers, Butterfield explains. They are going outside of the BD relationship. Some offer plug-and-play technology that is very attractive to wirehouse teams looking to go independent. Others take what the BD gives them and wrap other software like MoneyGuidePro around it and then can say to advisers: Make more money with us.

Read more: MoneyGuidePro: A New Version Rockets Out of the Gate

Have a dedicated marketing specialist.

Traditional OSJs usually dont offer marketing services and support, often forcing local advisers to use outside contractors. Having a marketing specialist on staff can be a big attraction for an OSJ, says Butterfield. It helps advisers who cant do it on their own bridge the gap.

More IBDs are now offering advisers digital marketing content platforms, he notes, and OSJs who can help advisers post content online or create digital campaigns will have a competitive advantage.

Provide advisers with customized services.

Services are a big part of the OSJ value proposition and they need to stand out, Butterfield stresses. For example they can provide advisers who join their network with a ready-made succession plan as part of the onboarding process.

Too often traditional OSJs are merely just an extension of what the firms underlying BD already offers, Butterfield says.

Some mid-level OSJs, described as facilitators in the report, take the traditional model a step further by offering piecemeal services to other firms.

But industry leading super OSJs have an executable business-building plan that focuses on the needs of smaller firms they service, Butterfield says. Theyre going to have something concrete in place and not just say Weve got a guy whos thinking about retiring in a few years.


But OSJs seeking to become industry leaders also face challenges and need to be fully committed, Butterfield cautions.

For starters, they require a capital investment to build the business and attract advisory firms to join. They also need patience and a tolerance for risk. These are investments that do not necessarily pay off quickly, the Aite report warns. There is no guarantee that if they build it, advisers will come.

OSJs looking to grow and join the industry elite also need a laser-eye focus on strategy, according to Butterfield. They have to ask themselves if they have the wherewithal to focus on building a business around serving other advisers versus just dabbling in being an OSJ and holding on to their own firm.

The Coming #FinTech Divide Between Investment And Financial Planning Firms

While there are an ever-growing number of advisory firms operating on the AUM model and offering wealth management services, there is still a significant gap between those that are ultimately still investment-centric, and the firms that are truly focused on financial planning first.

The significance of this difference in the culture of an advisory firm is that it impacts not only the depth of its investment vs financial planning services, but that it also shapes the technology decisions of the firm. Because the investment-centric firm is typically built around its portfolio accounting software as its core, while the financial-planning-centric firm uses its financial planning and CRM software as the hub of the business.

Yet despite the substantively different technology needs of the two firms, the overwhelming majority of advisor technology is still being developed for investment-centric firms, with at best only a token nod towards financial planning goals even though, ironically, the financial-planning-centric software solutions often command a premium price in the marketplace!

Nonetheless, as the commoditization of investment management continues to drive more firms towards offering comprehensive financial planning services, the technology shift is beginning, from the rise of Turnkey Financial Planning Platform (TFPP) technology solutions, to the rising demand of planning-centric firms for a more financial-planning-centric client experience. Will advisor technology solutions step up to fill the void?

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Helping your student start financial planning

BIRMINGHAM, Ala. (WIAT) — Parents, it’s time to face the facts. Your child is growing up and you have the opportunity to help them get ready for the future with simple financial planning.

Jacoby Kindred from America’s First Federal Credit Union says parents generally like to start their child’s first checking account before they leave for college. Depending on their age, if they are still considered a minor parents may need to be there to consent. The child will also need a state ID.

Students and parents looking to start a credit card should not sign up for anything that could overwhelm them. Look for cards that come with a lower balance so it’s easier to keep up with and not overspend.

Kindred says creating a budget is also a key part of making sure you’re prepared for the future and it’s not as restrictive as it might sound to a student. Having a budget means managing money in a different way so you can do different things while knowing you have the money to do so.

One of the biggest tips to creating a budget is be realistic and work around your lifestyle. Put down your budget in writing, such as in an Excel spreadsheet.

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