Is Your IBD Listening to You?

In the day-to-day life of a broker-dealer, the happiness and satisfaction of its representatives should be among its primary concerns. We consider listening to our reps one of the most important aspects of our rep relationship. We strive every day to make sure that our advisors feel heard and appreciated. We believe our approach led our reps to rank us high in the Wealth Management 2016 IBD Report Card (; March 8, 2016 Issue; The Top Broker-Rated IBDs 2016). We are so proud and very pleased to report that the 2016 IBD Report Card shows that responses from Sigma representatives placed our firm 5th overall and 4th among smaller IBDs across the industry. surveyed representatives from 80 Independent Broker-Dealers (IBDs), asking them to rank their IBDs in the key areas of compensation/benefits, compliance, management, operational support and service, practice support/professional development, product offerings, and technology. In all these categories, Sigma Financial scored at least 9.4 out of 10, averaging 9.6, and even tied for first in the operational support and service category with a rating of 9.8.

In an industry where financial advisors have their pick of the litter when it comes to finding the right IBD, Sigma Financial is proud to be such a high-ranking broker-dealer as judged by so many of our representatives. We’ve always believed that reps should not have to sacrifice what is most important to them in a broker-dealer just because they are familiar with that firm. Our suggestion to anyone who is unhappy at their current IBD is to look around and explore your options. Surveys like the IBD Report Card can help you understand how others feel about their broker- dealers, which may help you make a decision about yourself.

Have you thought about this? We have….

Back to the Basics: Effectively Communicating Across Generations

Are you effectively communicating with your clients across different generations? In this industry, we all know that effective communication is the key to gathering and retaining assets. Making sure clients are comfortable, and feel that they have received accurate and timely information, are both essential to a positive client experience. Do you know how to best deliver your thoughts and ideas based on your target audience?

We have all read numerous reports on how to effectively communicate across generations. Research shows it is best to communicate with the Greatest Generation one on one, notepad in hand, where things are detailed and written down on paper right in front of them; Baby Boomers through scheduled meetings and phone calls; Generation X by cell phone and meetings after business hours; and Millennials using digital communications and social media.  The newest consumer generation is commonly known as Generation Z. There hasn’t been a ton of research done on this group yet, and because of that, people struggle to determine the best communication plan to establish for them. We do have some initial impressions. Like Millennials, Generation Z are highly internet and social media driven in their communication, but in a very different way. Generation Z are multi-taskers and use images, symbols, abbreviations, and emojis to express themselves. They prefer quick, instant images to tell their stories…as these are fast and direct. Generation Z looks for precise and concise information. They expect services to be available instantaneously. Replies to their messages should be sent within a minute. They do not want to read a lengthy article for answers. If they are required to do so, they will quickly lose interest and you could lose a potential client. They’re more than comfortable with the digital era; in fact, they appreciate one that is “on steroids”, where with a click or swipe they have instant information. They are also prone to referrals, and often use internet reviews. These are your kids / grandkids, and the next generation entering the workforce and the investing space.

When prospecting for new clients, make sure that you are communicating effectively based on your target audience’s generation and comfort zone. Effective communication shows your dedication to servicing them efficiently using the methods they prefer and fit their lifestyle. As part of your initial meeting, develop a communication plan with them so that you are delivering on their expectations.

Have you thought about whether or not you are communicating effectively based on your target market? We have….

What are you doing in anticipation of the proposed fiduciary rule?

We’ve all been bombarded with numerous articles about the fiduciary rule proposed by the Department of Labor (DOL). We’ve read how the new rule is being aggressively pursued by the DOL and the current White House Administration. What has been your response? Proactive or reactive?

Can we be proactive in planning for the changes rather than taking the “ostrich approach” and just waiting for the final outcome? While we know that a fiduciary must exercise care, skill, diligence, and objectivity in evaluating, recommending, and reviewing investment options, the question remains: “Who exactly will be considered a fiduciary under the new rule?” While experts have opined on the rule’s anticipated details, the final answers are yet to be determined…but will be coming our way soon.

In order to demonstrate commitment to prudent investment planning, training, and ethics, additional fiduciary training is a necessity for individuals who handle accounts that will be affected by the new regulations. A great suggestion is to partner with a leading fiduciary training expert like fi360, a firm that offers exclusive fiduciary training events and software tools.

While the DOL has yet to implement the rule changes, they have now sent a final draft to the Office of Management and Budget. Has your broker-dealer proactively positioned itself ahead of these possible changes? We feel that additional fiduciary training will aid in the growth of our advisors’ practices as opportunities become available for those who hold the appropriate credentials. According to Melanie Waddell (ThinkAdvisor, Waddell, 2012), “The No. 1 complaint in Financial Industry Regulatory Authority (FINRA) arbitration cases is breach of fiduciary duty.”[1] This factual underpinning adds to the importance of advisors proactively seeking this training. As public awareness increases about fiduciary responsibilities, some advisors will be ahead of the curve and be able to act on opportunities, differentiating themselves from those who lag behind.

Have you thought about these opportunities?  We have….

[1] Waddell, M. (2012, 10 23). Breach of Fiduciary Duty Most Common FINRA Complaint. Referenced at

Succession Planning: What Happens When a Purchasing Advisor Dies?

When you own a financial planning business, do your ownership rights extend to your beneficiaries? The question comes up commonly these days. Some succession plans aren’t set up until a representative becomes terminally ill, and are then done hastily, often using free “boilerplate” documents. The rep usually decides to sell their practice to another advisor with payments going to them or their named beneficiary. We see succession planning scenarios like this all the time at our broker-dealer. What happens, though, if the advisor who purchased the practice unexpectedly passes away?

Does the beneficiary have the right to re-sell the practice to another advisor? Is the broker-dealer allowed to contact affected clients to inform them that their advisor passed away and let them know who will be servicing their account going forward? Believe it or not, we have been asked these very questions three times in the past year. The conversation always begins with the question: “Can they do that?”

From the broker-dealer’s perspective, yes, it is the b-d’s responsibility to alert a client if something has changed with how their account is being handled. Some would argue that it is the b-d’s responsibility to alert the client that the advisor who was managing their account is no longer acting in that capacity, and that the b-d itself must implement a plan to ensure the client’s needs are being met. So yes, the broker-dealer can, and should, take action.

When a beneficiary contacts us with questions, as a broker-dealer, we first advise them to see if language exists in the original selling agreement that relates to their current situation. Beneficiaries have no residual ownership rights to the clients as assets, and would not have the right to re-sell the book of business anyway because, by definition, beneficiaries are not securities-registered. They may, however, retain some rights, if specified in the selling agreement. If that agreement was prepared by a securities attorney, their rights should be clearly defined.

The bottom-line lesson: “Boilerplate” selling agreements and succession planning “freebies” found on the internet may save a representative time and money in legal expenses, but could potentially cost a beneficiary significant money down the road.

Have you thought about this? We have….

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