Remote brokers can change real estate, management and Wirehouse compliance



19 August 2021

As the telecom era shows signs that it will last long after the Covid-19 pandemic, major brokerage firms are likely to redefine their real estate footprint, branch management structure, and oversight.

Over the long term, firms may shrink their rosters of branch managers and complex managers as they consolidate oversight and as fewer brokers need dedicated desks, recruiters and consultants argue. At the same time, regulators and compliance professionals will shift their focus to brokers’ text messaging and voice chatting with clients to keep a closer eye on home or remote offices, according to compliance consultants.

Proofs of the office redevelopment that took place are already underway.

For example, demand for regional and mid-level branch managers has dropped, two recruiters said.

“Larger complexes on major communications channels have reduced the need for branch managers,” said Mark Elzweig, a New York-based recruiter. “Lost branch managers do not seem to associate with other positions – a sign of a weak hiring market.”

This trend may intensify in the future as firms move to a more “hotel” type of organization, with consultants registering in and out of office space and no longer needing permanent desks. According to Bill Willis, a recruiter based in Palos Verdes, Calif., Firms may change their “branch” management structure to give some local leaders more empowerment.

“Why would they hire more managers?” Willis said. “I don’t think this means a lot of people will lose their jobs, but the need to recruit new people for these positions is certainly not insurmountable.”

Remote control

In other evidence that the distant era is not going anywhere, regulators have also indicated that they are preparing for permanent flexibility.

Robert Cook, chief executive officer of the Financial Industry Regulatory Authority, has begun discussions with the Securities and Exchange Commission on the possibility of extending the deadline for waiver of personal checks on branches for next year, a spokesman for the industry’s self-regulatory body said.

Cook also said at an industry compliance conference in July that he would like to comprehensively revise the Finra oversight rule in 2022 and consider whether it could be updated to accommodate a risk-based approach when personal exams are required.

Chip Jones, executive vice president of Global Relay, a Vancouver-based company that provides technology to help brokerage firms comply with regulatory requirements, said Finra seems to have grown accustomed to its ability to spy on remote workers in the pandemic era and expects the regulator to do so as well. seek approval for more permanent changes in regulations, including what constitutes a branch.

“The pandemic has demonstrated that financial advisors can work remotely,” Jones said.

Regulators have adapted by shifting their focus to brokers’ text messages or phone calls, for example, Jones said, and firms are likely to do the same by expanding archiving capabilities and focusing more on these remote methods of communicating with customers.


Some consultants are optimistic that they can see some benefit to their wallet if firms can cut their real estate spending. Less time in the office could lead to higher wages for some advisors and aides, according to only preliminary discussions the former Morgan Stanley advisor heard.

A former Morgan Stanley adviser, who also did not want to be named, said that after the pandemic began but before she left the firm this year, the branch manager discussed adjusting the compensation system in favor of the advisers if they would agree. give up the once coveted corner offices.

“I was told that they are going to increase payments to people who work remotely,” the adviser said, noting that discussions were early and preliminary and took place mainly in high-rent regions, including New York and New Jersey.

A Morgan Stanley spokesman declined to comment. The firm made no announcements of possible changes or made proposals.

Members of consultant support staff may be the first category of staff to receive additional pay as the pandemic improves – if they come to the office. The assistant consultants are reluctant to return to pre-pandemic commuting work, one recruiter said. To get the assistants back – even on a hybrid basis – “will need to offer a cash bonus,” he said.

Tax relief

Consultants who work from their remote workplaces may be eligible for tax breaks, but this will likely depend on which state they live in and only applies to state income taxes.

If consultants’ employers no longer provide them with dedicated office space, Raymond said, they will be able to claim their home office (or costs of alternatively located jobs) as a deduction in some states as employment-related costs, resulting in significant savings, Raymond said. Edwards, National Tax CTO at Aspiriant, a technology and management consultant.

He stressed that such deductions for employees are no longer allowed under federal taxes. But consultants who are compensated as contractors and receive 1,099 tax forms can qualify for home office deductions at both the state and federal levels, Edwards said.

“You provide your own main place of business. This is where deductions become available to you, ”he said.

Edwards recommends that consultants who are employees and do not live in a deductible state consider negotiating with their companies to share savings as real estate costs decline.

Consultants can tell their employers, “If I don’t come to the office, you don’t have to rent this space, it’s cheaper, so my pay should be higher,” Edwards said.


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