Independent broker dealer financial advisors and execs explain IBDs

Ask 10 wealth managers what an IBD is, and you may very well get 10 different answers.

Years ago that question used to elicit a fairly simple response. IBDs were characterized by FINRA registration (as BDs) and 1099 independent contractor status (for financial advisors). But that just doesn’t cut it anymore. For one, the sector is home to some of the largest RIAs, as Cetera Financial Group CEO Adam Antoniades points out.

As part of the 35th annual IBD Elite survey of the largest firms, Financial Planning asked 11 advisors and executives to share their answers to the basic yet revealing query.

It’s important to ask this now as the landscape has changed. IBDs provide increasingly crucial resources like technology and compliance, but they also must find new growth as they aim to keep up with advisors’ evolving needs. .

In this complex milieu, asking them about their choice of IBD affiliation elicits industry jargon, a sense of support from the home office and a deeply felt duty to their clients.

Advisor Wesley Burns of Seattle-based Burns, Toussaint Associates made an IBD affiliation change in December that resonated on a deeper level than a technical switch from one firm to another. “You can’t be a Black-owned business if you’re not a Black-owned business,” he says.

Fellow LPL Financial-affiliated advisor Sandra Cho of Los Angeles-based Pointwealth Capital Management chose Golden State Wealth Management as her practice’s hybrid RIA and office of supervisory jurisdiction. The setup alters the feel of an IBD where she feels “a bit ignored” at top producer conferences, she says.

“I believe it is a tremendous uphill salmon river swim to get to that point as a minority and a woman, and you already feel excluded by the broad white male population of the financial advisor community,” Cho says. “My hybrid RIA makes me feel included. That’s why I think a hybrid RIA can be very important.”

The range of services has clearly expanded from those undertaken by insurers who gave rise to the IBD sector in 1968 by filing for their securities registrations. Today, advisor Laura LaTourette of Dahlonega, Georgia-based Family Wealth Group defines an IBD as “the biggest partner in my wealth management business,” she says in an email.

“In the past, an IBD was really just a firm that you affiliated with to access technology, compliance support, and products; there were small differences amongst firms but, for the most part, a lot of the offerings between IBDs were very similar,” LaTourette says. “Today, that has totally changed.”

Scroll down, to see the full range of how LaTourette and 10 other advisors and industry executives answer the question of “What is an IBD.”

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