Blog: Independent Broker Dealer Jon Henschen publishes “Regulation Turns off Entrepreneurs From Pursuing the IBD Channel” in the May 5th, 2021 issue of Financial Advisor – PR Web

We’ve become prisoners to our business and our overlords would be state and federal regulators who micro-manage our world with endless overlapping rules and regulations that sometimes contradict one another and make little or no sense for the consumer.

June 08, 2021

Jon Henschen had a conversation with an advisor that he has friended and conversed with since 2005 who saw the article, “Regulation Throws Sand in the Gears of Business” and e-mailed a letter explaining why the article was an understatement.

The advisor wrote:

“We spend more of our time doing more and more ridiculous compliance activities and reports that make no sense other than to protect the broker dealer from the regulators. There’s not enough time in the day to do it all. Many of the reps in our group find working in the current atmosphere to be in overkill mode and doing business has become drudgery. Applications are increasingly lengthy and take forever to complete; are highly scrutinized making advisors feel they have to be on the defensive all the time, even years after the sale was completed.

The NYDFS (NY Department of Financial Services) and all the other agencies are making it impossible to do business in our state. It has gotten so bad that insurers like John Hancock are pulling products off the shelves, effectively leaving the state after several others called it quits in the last two years (i.e., MetLife, among others). Advisors are confused by all the regulations and the new regulations on the horizon. It’s just too daunting. The worst for me was when my son said after a year at the firm, “I’ve had enough, this industry is too stifling for me.” My son is actively looking for other opportunities elsewhere and it breaks my heart because he’ll never know how great a business it used to be.”

The advisor’s letter stuck with Henschen for days compelling him to make the advisors thoughts heard. The last article published on regulation was from a broker dealer and macro-regulation perspective so seeing regulation from the perspective of a seasoned top tier advisor would carry weight and bring greater depth of outlook.

After asking the Advisor if he could elaborate on some of his points in order that we could learn from the details of his experiences. The Advisor agreed but asked to remain anonymous. The following are some of the concerns that Advisors face.

“Most of us were drawn to financial services because we wanted to be in charge of our own lives and destinies. We wanted to be our own bosses, build our own businesses, and have the opportunity for unlimited earnings potential that few callings offered. We had complete control to choose the hours we wanted, choose the clients we wanted to work with and learned to specialize into lucrative niches which reduced my workload while my income climbed.

When my business peaked, I loved every minute of it, being the first person in the office and the last to leave. Loving what I was doing never felt like work and I felt I was making a real difference in people’s lives. Not being a salesman hawking a product but rather a problem solver earning the respect of peers, the community and other professionals.”

Now broker dealers standing behind advisors through difficult times has largely been replaced with throwing advisors under the bus to save the broker dealer, even when they had followed all the company rules and did nothing wrong. “Things have been in such a state of flux that we feel like we’ve become prisoners to our business and our overlords would be state and federal regulators who micro-manage our world with endless overlapping rules and regulations that sometimes contradict one another and make little or no sense for the consumer.”

“Weekly, monthly and annual reports now take up 65% of my time, leaving me very little time to add new clients and grow my business. income. After factoring my loss of time into the equation, my real payout has shrunken drastically over the last 10 years while the cost of doing business has continued to rise.

Generating reports, filings, storing, and completing annual compliance reviews at the office is a drudgery that makes me and everyone at the office cringe.”

The financial services industry has regulations heaped upon them, yet advisors determined to do Ponzi schemes, steal from clients, commit fraud etc., don’t follow rules but rather, bypass the rules, while the advisors that walk the straight and narrow path have to operate their business through a mountain of rules, policies, procedures and most of all excessive paperwork that does little to protect the public. The greatest challenge to attracting people to our industry isn’t identity politics issues like equality or diversity, it is candidates having to contend with being in one of the most regulated industries in the country. As the number of broker dealers and advisors continues to shrink, will we have a viable future as President Biden follows the advice of former Senator Ted Kaufman, who’s a champion for more severe financial regulation asking for even more stringent requirements on disclosures and reporting? Financial Services Institute (FSI) will certainly have a busy docket.

Jon Henschen is founder of, an independent broker-dealer recruiting firm located in Marine on St. Croix, Minnesota. With more than 20 years of industry experience, Jon is a staunch advocate for independent financial advisors, and is widely sought after by both reps and broker dealers for his expertise and advice on independent broker dealer topics. He is frequently published and quoted in a variety of industry sources, including, ThinkAdvisor, Investment Advisor Magazine, Wealth Management Magazine, Financial Advisor IQ, Financial Advisor Magazine, Investment News and others.

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