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Private-Label Broker-Dealer

Keeping brand recognition while outsourcing services

The Brief:

In 2018, Foreside began a partnership with one of the pioneers of the responsible investing space who, since 1984, had integrated environmental, social, and governance factors into their investment process. As an investment advisor to five ESG focused mutual funds, the firm also owned and operated a transfer agent and a limited purpose broker-dealer.

With over $35B in AUM, the manager owned and operated their limited purpose broker-dealer for the sole purpose of underwriting mutual funds and maintaining FINRA licenses for registered representatives that marketed the firm’s proprietary mutual funds. This led to many employees fulfilling multiple functions, both for the advisor and the broker-dealer. Further, given the core mission of the enterprise, the broker-dealer operations and account maintenance were not a core focus which posed a challenge in an environment of increased risk, compliance, and oversight obligations. Foreside began working with the firm to explore options regarding the broker-dealer so the manager could focus more attention on portfolio strategy and management.

The Approach:

It was important for the firm to keep its brand tied to the broker-dealer and distributor. Foreside’s private label broker-dealer solution enabled them to maintain that critical brand awareness. Foreside purchased the firm’s broker-dealer leaving the brand name intact while transitioning all broker-dealer operations into Foreside’s broker-dealer service model.

Foreside’s relationship management team and client service leadership over the course of several months coordinated the upcoming sale and transition of the broker-dealer. During this time, Foreside helped the client understand the operational framework and policies and procedures, visited the client’s offices, and attended board meetings to ensure that relevant stakeholders became familiar and comfortable with the servicing model prior to the transition.

The Result:

The client was able to turn its focus back to the firm’s core strategy by alleviating the operations necessary to maintain the broker-dealer. Foreside has assumed responsibility for all broker-dealer operations, including the maintenance and execution of dealer agreements, NSCC sponsorship, review and approval of marketing materials, and licensing and supervision for registered representatives.  Foreside continues to support the client by hosting monthly calls with the four primary client service teams to ensure connectivity, awareness and to keep the firm apprised of the many regulatory requirements and changes within the FINRA broker-dealer landscape.

 

All situations are evaluated, and results may be different depending on the situation. It is important to note these case studies are not testimonials but examples of strategies that have been deployed to assist our clients. These examples may not be representative of your experience with Foreside and do not guarantee that you will experience the same or similar results.

Foreside and its affiliates do not provide tax, legal, or accounting advice. The case studies are provided for informational use only and should not be relied on for tax, legal, or accounting advice.