The first model has often been called “dual” advisor, a nod to the networking arrangement blessed by the SEC in the early 1980s, whereby advisors are W-2 employees of the institution but whose securities activities are supervised by the institution’s broker dealer partner, i.e., the advisors are affiliated with the broker dealer. The second model has come to be called “managed” advisors, a misnomer because the W-2 advisors employed by the institution are also managed, just managed by two different entities.

More descriptive terminology should recognize that the two models are different degrees of partnerships between the institution and the broker dealer.  In the first model, the institution outsources the broker dealer function, but retains the advisors as employees. In the second model, the institution outsources both the employment of the advisors and the securities back office.  This is a full-service broker dealer partnership, compared to the broker dealer (BD)-supported partnership of the first model.

CUNA Brokerage Services, Inc. (CBSI) commissioned Kehrer Bielan to analyze data that could inform that decision about which partnership model to choose.

This complimentary report compares institutions with the full-service BD partnership with institutions using the BD-supported partnership to determine which model:

• Performs better in delivering investment services, and
• Results in more net revenue to the institution.