Kehrer Group Influencers Are Divided on the Trend


We have heard buzz around the rising prevalence of “managed programs” in which the broker dealer assumes management and compensation responsibilities for the financial institution’s advisors. Our most recent data seems to confirm that the share of managed advisors affiliated with the major third-party broker dealers (“TPMs”) had been steadily increasing, from 7% in 2017, to 8% in 2019, and 9% in 2021. We polled the Kehrer Group Influencers to ascertain what is happening with managed programs now.




Half of Influencers from third-party BDs, vendors, and consultants believe that the prevalence of managed programs is increasing, adding credence to the trend. However, just 14% of Influencers from banks and credit unions share that view.


Furthermore, a substantial number of Influencers from banks and credit unions have already considered – and rejected – the managed program model. Among Influencers from financial institutions, half reported having considered and rejected moving to a managed program model. Another 21% haven’t considered it. Two of the Kehrer Group Influencers are in managed programs.


So, what’s the disconnect between the financial institution’s investment services leaders and the broker dealers and vendors that support them? It could be a matter of perspective.


Broker-dealers see the potential advantages of the managed program model. Managed programs may be a way to circumvent the institution’s aversion to adding headcount or paying up to recruit top advisors. Overcoming these obstacles is key to growing the investment services business in banks and credit unions, which today deploy far fewer advisors than are needed to capture a meaningful share of the opportunity.


The BDs also see opportunity in transforming the many financial services practices in banks and credit unions that are operated passively, or as defensive, “me too” plays.  The BD can better control who and how many to hire.


The BDs are aggressively marketing a feature of the managed program model that is attractive to many financial institutions:  managed programs reduce the financial risk to the institution, because they generally earn a percentage of gross revenue, no matter what the expenses are.


On the other hand, financial institution leaders have questions about the managed program model and its unintended consequences. Would converting to a managed program dilute the institution’s control, branding, and culture? How would it impact the institution’s relationship with the advisor? And of course, what happens to production and net income?


Are managed programs on the rise? Stay tuned.