Registered Principal and Compliance Officer of a member firm
Bringing somebody new into the broker dealer industry is an expensive endeavor. Much of the industry works on a share of revenue generated through a registered representative's activities. Unless a new associate comes from an ecosystem of friends and family that would be willing to invest with the new associate the prospects for generating sufficient revenue to reward the firm and the associate are slim. Too many new associates eave the industry after a short time, having effectively spent their precious savings to get started, often ending up in debt with a crushed ego. The firm likewise invested in a failed effort. Starting new associates in a team environment would be much more sustainable. The new associate would receive valuable mentoring, build experience, and prove his or worth by handling shared workload in the team. FINRA rules make sharing commissions in a team environment challenging. Many of these teams would be in independent offices where it would be desirable to have the broker dealer pay a non-registered company that could facilitate benefits and payroll. Opening the door to channeling commissions through such non-registered companies would make hiring staff more feasible.
Peter Nerone Comment On Regulatory Notice 21-17
Bringing somebody new into the broker dealer industry is an expensive endeavor. Much of the industry works on a share of revenue generated through a registered representative's activities. Unless a new associate comes from an ecosystem of friends and family that would be willing to invest with the new associate the prospects for generating sufficient revenue to reward the firm and the associate are slim. Too many new associates eave the industry after a short time, having effectively spent their precious savings to get started, often ending up in debt with a crushed ego. The firm likewise invested in a failed effort. Starting new associates in a team environment would be much more sustainable. The new associate would receive valuable mentoring, build experience, and prove his or worth by handling shared workload in the team. FINRA rules make sharing commissions in a team environment challenging. Many of these teams would be in independent offices where it would be desirable to have the broker dealer pay a non-registered company that could facilitate benefits and payroll. Opening the door to channeling commissions through such non-registered companies would make hiring staff more feasible.