"The strategy is working," said Dale Brown matter-of-factly during a media briefing on Tuesday morning in San Diego at the Financial Services Institute's annual OneVoice conference. Brown, the president and CEO of FSI and the quiet but effective face of the independent broker-dealer organization, was referring to FSI's strategy of growing membership and member engagement in the group. The goal of FSI, Brown said, was to build a "healthier, more business-friendly environment" in Washington, in particular by leveraging its now 35,000 advisor members as "citizen lobbyists."
Brown; FSI's 2013 chairman, Larry Roth of Advisor Group; and vice chairman Mike Mungenast of ProEquities told the early-morning gathering that the strategy of growing an engaged membership and building its lobbying efforts in Washington and the states was reflected in the growth of its budget. In 2010, when FSI instituted a five-year plan, the group's overall budget was $3.5 million. In 2013, the budget will be over $7 million.
That revenue growth has come from a "substantial" increase in membership dues—more than double, said Brown—that was implemented last year. While Brown admitted that the group did lose some members because of the increase, the overwhelming number of BD members (now at 98) "voted with their dollars" and anted up their dues.
A total of 53 member firms have partly or fully subsidized membership for their FAs, FSI said—20 firms fully subsidize their advisors' membership, while another 33 firms "facilitate" their FAs' membership by deducting their membership fees through their commissions.
So do advisors re-up once their BDs stop subsidizing membership? Brown said that the renewal rate was running at an average of 70%, since advisors "recognize the value" of their membership. Mungenast's broker-dealer is one example; from last year's 272 FSI members, there are now about 1,100 ProEquities members of FSI. That perceived value, said FSI Executive VP and General Counsel David Bellaire, who also spoke at the media breakfast, emanates from FSI's advocacy victories, which in turn partly come from the engagement of its members on issues like the maintenance of the independent contractor status for IBD reps.
