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How to Attract Top Producers to your Broker Dealer

Every Broker Dealer that I speak with has a very similar game plan: Step 1) Establish a Broker Dealer. Step 2) Hire top producers that have a quality client base. Step 3) Buy a big house and a boat. Great plan! The only problem is how to get top producers to come to your firm.

Broker Dealers have many answers to this question such as: 1. I know everybody (top answer) 2. Everybody knows me (tied for first) 3. I have hired tons of brokers and trained them. As soon as they find out that I have my own place they are going to come. There are many variations, but you get the point.

Top producers DO NOT join simply by virtue of your firm being in existence and while relationships are great to have in the long term, try not to rely on them to get you going. Most top producers like to see that you have established yourself before they make a commitment to switch to your Broker Dealer.
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Feeling the Heat

Over the past few weeks Broker Dealers have started to recognize that it is not enough to have a large Broker base with cash reserves and a good reputation. Broker Dealers need to be able to recognize failing ideas before they even get off the ground.

When a firm starts they usually have an idea of the type of Broker that they are looking for and the types of business they wish to conduct. However, as they grow new people come to them with new ideas some of them very good and some of them VERY BAD!

Case in point is the downfall of BrookStreet Securities. BrookStreet was an Independent Broker Dealer headquartered in California with offices across the country which had built a quality firm with a solid, well respected management team. In their quest to be successful they sold CMOs (Collateralized Mortgage Obligations). This sounds like a nice stable product because it has the word “collateralized” in its name.
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Buy or Start your Own Broker Dealer?

1) Buying an existing Broker Dealer.

Buying an existing Broker Dealer is a very appealing way of being in business with no down time. This is true to a large extent depending on the following factors a) The lines of business that the existing Broker Dealer is approved for b) The current clearing agent c) The background of the Firm d) the seller’s willingness to work with the purchaser e) The purchaser’s expectations f) the purchaser’s qualifications and resources and g) no restrictions from FINRA.
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Anti Money Laundering Procedures (AMLs) and Annual AML Review

It’s that time of year again when Firms start putting together the “year end list” of things to do. One of the major items that is overlooked are the Firm’s Anti Money Laundering Procedures, (AMLs) as well as the annual review by an independent outside auditor.

A lot of compliance and operations personnel don’t fully appreciate the serious nature of preventing money laundering. A common misconception is “how is a client laundering money by risking it in the stock market” or “we got all of the paperwork.” This attitude leads to an environment where supervisors are not even paying attention to simple “patterns” that would indicate a potential violation.
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