What does an OSJ need to do to be an industry leader?

It’s a question that is coming up with more regularity — and more urgency — as Offices of Supervisory Jurisdiction, now often called super OSJs, continue to be one of the fastest growing and most competitive areas of the advisory business. Those firms that are content with being traditional or even middle-of-the-road providers of compliance and regulatory services to advisers risk being left behind.

But OSJs that aspire to become industry leaders can reap benefits including higher advisory productivity, client assets per adviser and percentage of revenue derived from recurring AUM-based fees.

Financial Planning spoke to Bill Butterfield, senior analyst for Aite Group, for his insights on what it will take for OSJs to become industry elites.

Take care of advisers' tech needs - beyond what the IBD does.

Independent broker-dealers typically provide advisers with work stations that are integrated with leading CRM systems. But IDBs usually aren't deeply involved with tech training and support, says Butterfield, author of a recent Aite report "The Evolving OSJ: Emerging Business Models."

In addition to providing tech training and support, OSJs who want to be industry leaders should license tech applications on their own, suggests Butterfield.

"These OSJs are doing more than helping advisers get the most out of the tools and the technology that the broker-dealer offers," Butterfield explains. "They are going outside of the BD relationship. Some offer plug-and-play technology that is very attractive to wirehouse teams looking to go independent. Others take what the BD gives them and wrap other software like MoneyGuidePro around it and then can say to advisers: 'Make more money with us.'''

Read more: MoneyGuidePro: A New Version Rockets Out of the Gate

Have a dedicated marketing specialist.

Traditional OSJs usually don't offer marketing services and support, often forcing local advisers to use outside contractors. "Having a marketing specialist on staff can be a big attraction for an OSJ," says Butterfield. "It helps advisers who can't do it on their own bridge the gap."

More IBDs are now offering advisers digital marketing content platforms, he notes, and OSJs who can help advisers post content online or create digital campaigns will have a competitive advantage.

Provide advisers with customized services.

"Services are a big part of the OSJ value proposition and they need to stand out," Butterfield stresses. "For example they can provide advisers who join their network with a ready-made succession plan as part of the onboarding process."

Too often traditional OSJs are merely just an extension of what the firms' underlying BD already offers, Butterfield says.

Some mid-level OSJs, described as "facilitators" in the report, take the traditional model a step further by offering piecemeal services to other firms.

But industry leading super OSJs have an executable business-building plan that focuses on the needs of smaller firms they service, Butterfield says. "They're going to have something concrete in place and not just say 'We've got a guy who's thinking about retiring in a few years.'"


But OSJs seeking to become industry leaders also face challenges and need to be fully committed, Butterfield cautions.

For starters, they require a capital investment to build the business and attract advisory firms to join. They also need patience and a tolerance for risk. "These are investments that do not necessarily pay off quickly," the Aite report warns. "There is no guarantee that if they build it, advisers will come."

OSJs looking to grow and join the industry elite also need a "laser-eye focus on strategy," according to Butterfield. "They have to ask themselves if they have the wherewithal to focus on building a business around serving other advisers versus just dabbling in being an OSJ and holding on to their own firm."

Charles Paikert

Charles Paikert

Charles Paikert is a senior editor with Financial Planning, a SourceMedia publication.