Insights | 07.22.20
Negotiating the Business of Being a Broker-Dealer Through Current Crisis
It is no secret that the COVID-19 pandemic has altered how we do business and how our customers expect to do business. Our work environments have changed drastically in the last few months, and our reliance on technology has undoubtedly grown. To help transition into this “new normal” as seamlessly as possible, BISA presents a new webinar series, "Technology Tuesday."
Join us next week on Tuesday, July 28 for part one of this four-part webinar series, “Negotiating the Business of Being a Broker Dealer Through the Current Crisis.” Read below for a Q&A with presenter Aladin Abughazaleh, chief executive officer at ATA Risk Station. Abughazaleh details what attendees can expect to take away from this session with co-presenter Charles Reiling, CEO of Coastal Equities, including how senior executives of broker-dealers can reinvigorate both their business and operating models to add more value and revenue streams to both advisors and clients, the impacts of COVID-19 and how to find solutions to challenges brought on, what broker-dealer management teams should be focusing on right now and more.
What can attendees expect to take away from your upcoming webinar, “Negotiating the Business of Being a Broker Dealer Through the Current Crisis?”
Assuming the attendees are senior executives of broker-dealers, the main takeaway from the webinar will be some fresh ideas about how they can reinvigorate both their business and operating models to add more value to both advisors and clients — and create new recurring revenue models based on delivering that new value.
Trying to navigate businesses and operating models as executives of bank and credit union investment programs can be tricky enough in this ever-changing landscape. Do you believe the COVID-19 pandemic has even more so impacted these challenges? What are ways to create solutions from these concerns?
COVID-19 has had an impact on many levels. First, the pandemic helped end the bull market. Second, social distancing has physically separated advisors and clients at a time when coaching and hand-holding can really be helpful in maintaining client confidence. Third, concerns about employment and health risks have caused a collapse in demand and employment in many industries — which is a negative feedback loop for investors. Tools like Zoom support conversations and screen sharing that allow advisors to operate remotely, but broker-dealers have to empower advisors with the correct tools to maximize the impact of those interactions.
How should executives and teams reassess to add value and revenue streams to their firms moving forward?
The broker-dealer model needs to evolve to maintain relevance for both advisors and clients. On the revenue side for broker-dealers, the sudden end of the bull market and collapse in interest rates makes the current environment the Perfect Storm.
Between the RIA and Robo options, the broker-dealer operating model is struggling for relevance with both advisors, existing investors and the next generation. Separately, the business model is being massively challenged by lower net interest spreads, rampant fee discounting, falling AUMs and rising advisor payouts. In addition to empowering advisors and supporting compliance, ATA RiskStation™ can also help broker-dealer executives to create new recurring revenue streams to help offset their firms’ severe margin compression. Clearing firms and custodians are actually very well positioned to enable some of these innovations by integrating the required core technologies directly into their tech stacks to facilitate broad adoption across broker-dealers, advisors and clients.
Do you have anything else you’d like to add?
1. Evolving business and operating models to monetize technology is not optional in the long-term. With the application of superior technology, there is nothing preventing Amazon, Google and Facebook from disrupting wealth management the same way Quicken has disrupted the mortgage business and built massive market share very quickly. Driving a better client experience rapidly shifted consumer expectations about what the mortgage process should look like — and consumer behaviors quickly followed their new preferences. Broker-dealer management teams need to focus on where the puck is going — not where it has already been.
2. The SEC Reg BI rules took effect July 1. The Care Obligation is a very heavy lift for many broker- dealers who don’t have the processes and data models to easily comply. The data and audit trail that ATA RiskStation™ produces from supporting the advisor/client conversations above can also be leveraged to help broker dealers comply with the Care Obligation.
To register for “Negotiating the Business of Being a Broker Dealer Through the Current Crisis” webinar session and to learn more about BISA’s Technology Tuesday webinar series, visit our website. Sessions take place on Tuesday afternoons from 4:00 p.m. -- 5:00 p.m. ET.