Why Do Advisors in Bank-Owned BDs Outperform Advisors in Institutions Affiliated with Third-Party BDs?

Why Do Advisors in Bank-Owned BDs Outperform Advisors in Institutions Affiliated with Third-Party BDs?

 

Ever since Kehrer Bielan has tracked data on the average annual gross production of advisors in banks and credit unions, the average GDC has been substantially higher for the advisors in bank-owned BDs than their peers in institutions affiliated with the third-party BDs.

 Source: Annual Industry Checkup: 2021/2022. Kehrer Bielan Research & Consulting, 2022.

 

There have been speculations about the source of this persistent gap:

  • Bank-owned BDs have been able to attract better advisor talent, or they are more willing to pay up to attract it.
  • Advisors in large banks have the advantage of the bank’s brand.
  • Advisors in bank-owned BDs brought more assets with them to the bank, so they had a leg up from the beginning.
  • They have longer tenure, so have had more time to build a practice.
  • Customers in large banks are wealthier, so advisors in those banks are working more fertile ground.
  • Advisors in bank-owned BDs have larger territories, so they are cherry picking; they actually have poorer penetration of their opportunity.

Kehrer Bielan is seeking a sponsor for research to resolve these questions. The research will also provide insights on how institutions that partner with third party BDs can close the gap.

We plan to analyze our proprietary database of 2,884 individual advisors from 162 banks and credit unions, including both bank-owned BDs and institutions affiliated with third party BDs, and firms that span the size spectrum, from a half dozen advisors to over a hundred. The data include:

  • Advisor age and tenure
  • AUM and its composition
  • Revenue and its composition
  • Size of client book
  • Deposit territory
  • Financial planning activity
  • Revenue per client
  • Access to sales assistants
  • Whether the advisor is part of a team
  • Whether the advisor is based outside the branch network, i.e., a “second story” advisor

Sponsorship Fee: $25,000