Recently I read a very interesting Investment News article written by Jodie Papike, a recruiter based in New York. She discussed how financial advisors are increasingly making the move to independence, but are often faced with a number of important decisions, one of them being whether to join an existing OSJ group to provide supervision and additional support. There are many benefits of joining an OSJ including high-reaching and high-service capabilities, a better financial deal, lead generation and coaching programs. Affiliation with an OSJ group can provide the familiarity of a smaller firm while providing the strength and dependability of a larger broker dealer. This is important in areas such as increased transition services, operational efficiencies and quicker compliance reviews. It gives financial advisors a great amount of guidance on how to succeed in today’s market. Many financial advisors feel that an OSJ group represents a better deal financially. In addition, some OSJ offer a variety of programs not offered directly by broker-dealers such as referrals and access to attorneys, certified public accountants as well as coaching and conferences.
She points out that deciding to join an OSJ group requires advisors to research and evaluate all options based on their own business, finances and relationships. Although OSJ groups provide these benefits, they come at a cost. Generally, using an OSJ incurs a 2 to 10 percent override for supervision and another 10 to 25 percent for additional benefits. Many advisors feel that the fees are well worth the costs. In addition, when choosing an OSJ group, it is important to find one that fits your business model and culture. Last, it is important to note that affiliating with a group such as an OSJ usually involves taking precautions to make sure you will be protected if you decide to leave – one of our key practice areas in assisting advisers who transition. Always remember to review your contract with the OSJ you choose. OSJ’s are not for everyone, so making sure you do your homework and evaluate all possible options for you and your business is the best way to ensure success.
Eccleston Law Offices counsels, represents and defends financial advisers nationwide in regulatory, compliance, disciplinary and employment matters in arbitration and litigation, and before regulatory bodies such as the SEC, FINRA and state securities regulators. We frequently defend forgivable loan collection actions, prosecute Form U-5 defamation actions, counsel advisers as to how to transition successfully from firm to firm and negotiate the best possible agreements with their new firm, and provide succession planning, buy-sell agreements and other exit strategies and strategic consulting, practice transitions, mergers, acquisitions and divestitures.
