Where to hang your shingle: Investment questions every advisor should ask their firm

by Steven Vacinek, Investment Consultant

Navigating the landscape of all the different choices that exist in the financial industry can be daunting.

Decisions about independence, payout levels, suitability for your clients, and meeting your growth all come into play and can become pitted against each other.

The question, “Will I take a higher payout and give up many of the services that have allowed me to grow and value my time?” is just the beginning when it comes to choosing a firm to build your business.

The investment components can have a large impact on your decision-making process.

Your goal is to seek independence while getting all the services and benefits of a full-service firm.

You want to identify a firm that offers a wide range of platforms, robust investment choices, and the ability to customize investment portfolios.

When inquiring with a broker dealer, you want to fully understand all the aspects of their platforms for your client needs. Platform choices could include advisor-directed, internal, and external turnkey asset management programs, TAMPs, as well as commission-based brokerage.

Most brokerage firms will offer both commission-based and investment advisory under the advisor-directed modeling.

A further differentiator would be if they also offer TAMPs. These TAMPs can be managed internally, if so, do they use proprietary products, or managed by an outside third party? The industry has widely accepted the use of TAMPs whether managed by the firm or a true independent third party. Outsourcing part or all of your investment services to a TAMP can free up time and minimize compliance concerns.

At North Star Resource Group, we offer all the above-mentioned services for your investment needs. In addition, we offer firm limited discretion models for in house ease of money management.

The next thing you will want to inquire about would be the products that are offered.

Will you get access to the full spectrum of investment products or limited to a proprietary few?

Some firms will offer a firm list of stocks, ETFs, and/or mutual funds, making your job easier when it comes to placing products into a client portfolio.

Firm limitations or additional expenses for certain products are both great questions to pose to a potential new broker dealer. Additionally, you will want to learn about fixed income or bond trading options. Not only if you must buy a bond, but also if you would need to sell a fixed income position.

Since the advent of online trading and markets, not many firms have their own trading desks anymore. You will want to know how and who they use to trade market driven products, especially bonds. At North Star, we believe multiple product offerings are  essential for a sustainable practice and client needs.

Additional investment products are also very important to an independent, well-rounded advisor practice.

Products like annuities, variable life policies, real estate, or access to private equity or hedge funds may or may not be available in some form or another.

Would you have access to multiple product providers, limited to a few, or only offered proprietary product? At North Star we strive for access to multiple providers allowing access to more options for your clients needs.

High net worth products or exchange funds can also assist a wider variety of clients as your practice grows. Access to products within the retirement area such as qualified plan options, 401(k), 403(b), or pension plan are beneficial additional options.

A unique feature of North Star Resource Group is a proprietary distribution software program that allows for a confidence number assigned to a client’s retirement goals. It scores the chances of success in retirement, and depending on risk and time horizon, it will adjust the client’s portfolio risk based on desired success rate. The program also has a distribution and tax loss harvesting function for client portfolios.

If you are considering changing where you hang your shingle, hopefully some of these questions and thoughts will help arm you with information. Asking the right questions ensures both you and your clients have access to the industry tools, while providing for an independent practice.