- The So-Called Decline of Broker-Dealers
- Diversifying Portfolios
- Alternative Investments
It comes as no surprise that the number of RIAs has been on the rise over the course of the last 10 years. As more and more advisors are breaking free from wirehouses and opting for independence, many are turning to the RIA model. As a result of this trend, many would have you believe there is a significant decline (if not, apparent death) of participation in the broker-dealer model. But is that the case?
Despite a decrease in the number of broker-dealers and the seeming popularity of the model, it would be a major misstep to overlook the benefits of the broker-dealer model. Broker-dealers continue to provide many advisors with top-of-the-line products and services that help meet the unique and specialized needs of clients. Additionally, broker-dealers are the perfect fit for so many – the question is whether it’s right for you.
For those that are looking for greater independence, but don’t know which route to go, the broker-dealer route might be the better option. Partnering with a broker-dealer tends to give advisors more opportunities to diversify their portfolios, access top-tier technology and get marketing support for those efforts.
Many RIAs are known to steer clear of alternative investments. They tend to post a greater degree of risk and can be more difficult to execute. As a result, many RIAs find the time and effort needed to execute against alternative investments to not be worthwhile. Broker-dealers, however, make offering alt investments more viable — especially with the possibility of selling agreements with product sponsors. Advisors looking to diversify portfolios beyond the usual stocks, bonds, and mutual funds should turn to broker-dealers as a possible solution.
Broker-dealers can also offer their advisors ways to diversify their portfolios in ways that RIAs can’t without special licensing. Broker-dealers are licensed such that they can provide the investment banking services that are necessary for certain investment opportunities, including private equity investments and M&A deals. Advisors wanting to explore unique diversifying opportunities and not be pigeon-holed to certain types of investments should consider partnering with a broker-dealer.
The number of broker-dealers may have been declining over the past 10 years, but they’re still a strong candidate for advisors to consider when looking to break free from a wirehouse or find a better home than their current broker-dealer. Getting some of the freedom of independence with the advantages that a broker-dealer already has in place and can bring a lot to the table. But you won’t know unless you test the waters. That’s where we step in. 3xEquity is here to help you find the next home for your business. In just a couple of days, we’ll secure you multiple offers from today’s leading broker-dealers all while you remain 100% anonymous.
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