This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Pershing Identifies Six Transformations Elite Broker-Dealers Use To Outperform Peers

JERSEY CITY, N.J., Dec. 9, 2013 /PRNewswire/ -- Pershing LLC, a BNY Mellon company, today released a study that shows how elite broker-dealers are outperforming their peers by focusing on six key differentiators. The study, "Broker-Dealer of the Future II: Six Stunning Transformations That Are Creating the Broker-Dealer of the Future," consists of six guidebooks that focus on the transformations broker-dealers are employing. These transformations address how firms can become more profitable by responding to innovations in technology, service methods and shifts in demographics.

According to the report, while profitability has improved since the financial crisis, all firms surveyed reported that they still face headwinds in this crucial area. This, combined with elevated recruitment costs, has left many firms challenged to create growing and sustainable businesses. Yet despite the limitations of today's business environment, Pershing's study shows the changes some broker-dealers have made to improve their profitability.

"Over the last five years, the primary focus of many firms was on survival. However, the next few years are going to be focused on how to position firms for future success—and there are a number of things to consider when doing so," says Jim Crowley, chief relationship officer at Pershing. "In a rapidly changing industry with rising operating, recruiting and compliance costs, it is essential for broker-dealers to stay relevant, deliver value to their clients and create a stable, yet fluid, business model that balances service offerings, profitability and growth strategies."

According to the report, profitability is more closely related to a firm's strategy than its size and capabilities. By transforming their business models, many broker-dealer firms may also increase their profits.

Pershing's qualitative and quantitative research identified six key transformations that will guide the broker-dealer of the future:

  • Identify ways your firm can avoid "commoditization": In the past, advisors affiliated with broker-dealers to satisfy a supervisory requirement and to have access to better technology. Since then, regulation and competition have made the requirement less relevant, while technology and the markets have commoditized solution access and, in some ways, broker-dealers. Three-quarters of advisors say that their broker-dealer is less than effective at communicating their value. The broker-dealer of the future uses everything at their disposal to retain talent and drive recruitment, while creating a richer value proposition for advisors.
  • Foster organic growth: Most broker-dealers devote their attention and budget to acquiring new talent. Yet organic growth may offer a return up to six times higher. Forward-thinking broker-dealers continually look for ways to enrich and maximize existing relationships.
  • Establish a sound economic model: Ballooning bonuses, higher compliance costs and growing technology investments are squeezing margins tighter. High payouts may not be sustainable, often hurt profitability, and may lead to spiraling increases as broker-dealers set out to recruit or retain advisors. As a result, the broker-dealer may be challenged with profitability, even if recruitment and retention efforts are successful.
  • Avoid the winner's curse of high-cost recruiting: Faced with a fiercely competitive market, a broker-dealer can spend seven years' worth of profitability to attract and bring in the best recruit. However, high-priced recruits tend to have shorter tenures—averaging only three to five years— so a myopic focus in this area can be costly.
  • Espouse advisory services: The broker-dealer of the future sees over the horizon, conducting itself more like a large RIA than a large broker-dealer. By offering advisory services as part of its organizational core, broker-dealers can build a profitable and integrated service model that blurs the historical line between brokerage and advisory businesses.
  • Demonstrate stability and longevity: Top advisors place a high value on stability and a sound risk culture and want to affiliate with broker-dealers who proudly demonstrate their commitment to these attributes. The broker-dealer of the future is a firm known as the financially sound and prudent firm.

To obtain a copy of " Broker-Dealer of the Future II: Six Stunning Transformations That Are Creating the Broker-Dealer of the Future" please visit pershing.com/thefuture.

Pershing and its affiliates provide global financial business solutions to approximately 1,600 financial organizations, broker-dealers, registered investment advisory firms, advisors, fund managers and asset managers who represent over 5.6 million active accounts. Located in 23 offices worldwide, Pershing delivers dependable operational support, robust trading services, flexible technology, an expansive array of investment solutions, practice management support and service excellence. Pershing is a member of every major U.S. securities exchange, and its international affiliates are members of the Deutsche Borse, Australian Stock Exchange, Irish Stock Exchange, London Stock Exchange and Toronto Stock Exchange. Pershing LLC (member FINRA/NYSE/SIPC) is a BNY Mellon company. Additional information is available on pershing.com, or follow us on Twitter @Pershing.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,172.68 -107.06 -0.62%
S&P 500 1,994.29 -16.11 -0.80%
NASDAQ 4,527.6890 -52.10 -1.14%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs