Join an Independent Broker-Dealer
If you hold Financial Industry Regulatory AuthorityTM (FINRA) registrations, joining an independent broker-dealer allows you to own and manage your practice, while affiliating with a broker-dealer that provides a comprehensive array of compliance, technology, trading, and value-added services. Over 120 large independent broker-dealers (representing over $50 billion in revenue) and a number of smaller broker-dealers service more than 100,000 registered representatives in this manner. Most insurance companies use this model to provide investment services to their affiliated insurance-based advisors. The diverse platform allows for the affiliation of advisors from relatively small practices with under $100,000 in revenue to those with over $1 million in revenue.
The independent broker-dealer business model may be the best fit if you wish to become a business owner and manage your own practice but at the same time need a FINRA member broker-dealer to conduct a portion of your business such as commissions. Beyond regulation, the model suits advisors who understand that increased efficiency and productivity can be created by outsourcing to a strategic partner. The combination of independent business ownership and the resources of an advisor-centric broker-dealer makes a powerful and compelling package.
Dually Registered Advisor Within an Independent Broker-Dealer
Typically, independent broker-dealers offer fee-based advisory solutions to dually registered advisors (with Series 7 and 65 registrations) through the broker-dealer's Corporate RIA. This setup is common across all broker-dealers including independent broker-dealers, full service firms, and banks–and represents over 200,000 advisors who offer fee-based services.
Hybrid Advisor Within an Independent Broker-Dealer
If you seek more independence you may operate under your own independent RIA structure as a hybrid advisor. Typically, the RIA business will be serviced by an external RIA custodian such as Pershing Advisor Solutions. Since the broker-dealer is required to retain regulatory oversight of the advisory business, the hybrid advisor arrangement is less common. However, due to an increasing demand, there are several independent broker-dealers that allow advisors to operate their own independent RIA.
Insurance Arrangements
Insurance broker-dealers represent some of the largest independent broker-dealers in the industry and command a full array of sophisticated resources that support investment professionals. Affiliation with an insurance broker-dealer typically implies affiliation with an insurance firm and should be viewed in that broader context. Often the local insurance agency (rather than the home office) defines the actual advisor contract and there may be significant variations in the support and compensation offered by different agencies. If you are interested in affiliating with an insurance company, you should consider the depth of capabilities of the broker-dealer and the broker-dealer's role in your practice.
