"The Advantages of the “Hybrid” Model" (No, we’re not talking cars) by Mitch Vigeveno and Jason Burke There has been a recent flurry of discussion in regards to the place for Hybrid, or Dually-Registered Advisors due to the recent publication of a Pershing-sponsored, Moss Adams report on the subject.  In short, the Hybrid model is firmly entrenched in the financial planning landscape and is not going anywhere soon.  And why should it?  For those who implement the model correctly, it can be the best of both worlds.   To be “dually-registered” means to be both registered with the NASD and the SEC (and all the supervisory issues that those agencies entail).  According to Kristin French’s March 2006 article in Registered Rep magazine, “this hybrid has emerged as a popular, and profitable, model in its own right.  As more traditional brokers turn to advisory business, some of them are straying across the line to the RIA side.  Many of these brokers still do substantial commission business, however, and would like to keep it up.”   And the numbers don’t lie.  According to the Moss Adams report, there are 5,612 hybrid firms (RIAs) with $716 billion in assets under management with $6 billion in revenue.  Additionally it estimates that about 2,000 brokers leave to set up RIAs each year.  So what is it that makes the hybrid so appealing?   1)     CHOICE.  By dually registering, a broker has more flexible menu of options to show their clients at the financial planning table. They have the freedom to choose what products, services and fees are the best for their clients. This flexibility allows them to work with smaller clients and open the door to cultivate the high net-worth clients of tomorrow. 2)     YOUR NAME.  You’ve been investing equity in your business and have been developing your own “brand” amongst your clients and community.  The hybrid model can help you more easily establish & maintain your corporate identity and provide a sense of true independence and objectivity to your clients.  After all, it’s your business, not your broker-dealer’s. 3)     SUPPORT.  By working with both a custodian and a broker-dealer, you have more choices in your outsourcing services and technology.  By using the best both platforms and integrating them successfully, you can increase your efficiency and have more time for your clients. 4)     COMPLIANCE.  Dual registration allows planning to be viewed separately from brokerage activities.  Many broker-dealers in this space are willing to take on the additional compliance oversight to help make you a successful advisor.     So, is becoming dually-registered the right move for you?  I don’t know.  Do you want to offer more choices to your clients but still keep your Series 7 license (who wants to take that test again?)?  Do you want to invest equity in your business instead of your broker-dealer’s?  The key to success in this arena is the integration of the two platforms and finding a broker-dealer who knows how to do that well.  About 75% of broker-dealers allow some form of dual registration, according to a survey by the Financial Services Institute but some offer much more flexibility than others.  At Turning Point, we have been placing financial consultants with quality independent broker dealers for 12 years and can help find the best match for you.  For more information on whether “going hybrid” or “going independent” is right for you or for help finding a new broker-dealer that is friendly to this hybrid concept, please call Jason Burke or Mitch Vigeveno of Turning Point, Inc. at 727-725-8876 and we will be happy to assist you.   **** Since our inception we have helped over 400 financial consultants make the move to independence. "I cannot express to you the joy and the increase in quality of life that I have found since leaving the wirehouse world." Shane Merritt, Branch Manager Merritt Capital Management Here Are A Few of the Benefits of "Going Independent": Payouts on all your business, including fee based accounts of 90% plus. The opportunity to build substantial equity in your business and sell it at an attractive multiple when you desire. The opportunity for you, not someone at the home office, to control your bottom line and the profitability of your practice. The opportunity to build related businesses such as insurance, qualified plans, or trust companies, and keep those revenues. The opportunity to eliminate your clients’ perceptions of conflicts of interest with research departments and corporate finance groups – TRUE OBJECTIVITY. The opportunity to charge and keep substantial fee income for planning, analysis and other services to your clients. The availability of technology that is as good or better than anything you have now. The list goes on… **For a FREE "Guide to Moving Your Book", please visit: www.goingindependent.net. This Month's Registered Representative Opportunity: Our client is an integrated boutique financial services firm focused exclusively on serving high-end investment advisors and their high net worth and institutional clients. They offer talented brokers and financial consultants who are frustrated with the bureaucratic wirehouse or large corporate environment the opportunity to achieve professional independence through the establishment of a sophisticated advisory practice. They provide much needed transitional support to those experienced professionals who are seeking to take better control over their business lives and move to a more objective independent fee-based practice. The firm's unique turn-key asset management platform (TAMP) not only includes a wide array of traditional managed products, but also a significant offering of alternative structured investments, namely hedge funds (and funds of funds). Their advisors are able to best serve their high-end clients who desire these sophisticated products for yield enhancement, diversification, and/or hedging purposes. The company is uniquely positioned to leverage two extraordinary trends within the financial services industry: the investors' desire for sophisticated advice and their increasing demand for (and lack of) conflict-free objectivity. Most investors recognize that the financial services industry is currently plagued by conflicts of interest, operational inefficiencies, and scandals; more than ever, they seek out those advisors whose independent practices are removed from such potential abuses. The comprehensive broker-dealer services combined with a "best of breed" technology suite contributes to the advisors' successes through ongoing support, education, and training. This firm provides these professionals with all the needed support and the sophisticated investment solutions to meet the demands of their clients and grow their independent practices. Controlling Their Own Destiny: This BD allows advisors to maintain "destiny control" over compensation, marketing, employment decisions, product offerings, and expenses. Transitional Support: The firm guides advisors through an orderly transition from brokerage firm dependence to true advisor independence. Similarly, commission-based professionals are effectively transitioned to more objective fee-based compensation structures. Alternative Asset Classes: This BD provides advisors with highly specialized research and portfolio implementation on a full range of alternative investments: hedge funds, hedge-fund-of-funds, private equity capital, real estate, emerging market opportunities, and other sophisticated products demanded by their high end clients. Ongoing Training: Once the practice is established, the BD provides comprehensive education and training to help advisors remain abreast of the latest industry developments and compliance issues, while enhancing the level of service offered to their clients. A Flexible Practice: Based on the desires of the advisor, this BD will structure these opportunities either as independent practices or through employee-based affiliations.   If you know someone who might be interested in the above opportunity or who might be ready to go Independent, please have them contact Jason Burke directly at 727-725-8876.

Here's some additional information from Turning Point, Inc...

www.BrokerBestPractices.com
www.BankBrokerBestPractices.com
www.IndependentRepBestPractices.com (*Sept 2005 REPORT AVAILABLE!)
www.FABestPractices.com (Financial Advisors)
www.InsuranceAgentBestPractices.com

By clicking on any of these links, you will be taken to a webpage where you can Preview these reports, take a short survey, and then print the entire report when you're done. It's that easy.

TURNING POINT PARTNERS:
Are you getting the most out of your business?  Are you operating at peak efficiency?  How about your marketing, your compliance,  or your HR?  We have some friends who can help you out.  Just visit our Partners section in our website for links to a variety of services that are helpful to building your business!

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