Questions Answered

Broker Village is an analytics and consulting firm. It is a division of Black Cat Decisions, our holding company. We create decision-making tools and offer consulting services to the retail financial services industry. We help firms optimize their pricing policies, comply with regulatory mandates, and increase the productivity of their financial advisors. For example, should a B/D allow legacy trades to move to advisory accounts? Should a financial advisor hire a sales assistant? As better decisions are made, profits and net worth may rise and the potential for liability may fall.

Our tools and services are for executives, advisors, and regulators. Executive-level tools display account value, total cost of ownership, revenue, and advisor pay. Advisor tools display assets, pay, and practice value. All tools can be customized and include consulting services, sales material, training, and support. Results are extremely accurate and often audited by CPAs, a securities lawyer, CTO, and CFA.

Yes and no. Our products and services are for financial service executives, financial advisors, and regulators. If a firm that licenses our tools wants to make them available to individual investors, it’s OK with us. We will not do so, however. Individual investors should not contact us because we are not licensed to provide investment advice.

 

Product Development and Revenue Issues: Trade & Compliance Analyzer, Share Class Calculator, Profitability Optimizer 

 

• Model how various pricing structures affect a fund’s competitive profile
• Model how various pricing structures affect a fund’s revenue stream
• Evaluate the financial impact of launching, closing, or re-pricing a fund
• Create competitive advisor pay scales without conflicts of interest
• Create sales material more quickly and accurately
• Model the revenue impact of different internal financing rates and structures
• Model the revenue impact of changing trail start dates and amounts
• Model the revenue impact of restructuring breakpoint and CDSC schedules
• Recapture lost revenue by pricing clean shares optimally at the product and account levels
• Evaluate the firm-level revenue impact of eliminating shareholder benefits like LOI and ROA
• Evaluate the investor-level cost impact of not receiving benefits like LOI and ROA

 

Compliance and Regulatory Issues: Trade & Compliance Analyzer, Trade Surveillance Tool

 

• Evaluate the corporate prudence of moving select clients to advisory accounts
• Evaluate conflicts of interest at the point of sale, over time, and upon redemption
• Equalize pay so that a client is indifferent between two investment options
• Equalize pay so that a client is indifferent between a brokerage and advisory account
• Help investors choose the proper share class and avoid undue fees
• Ensure that prospectus suitability text is consistent with the math
• Identify more quickly issues of reverse churning…and fix them
• Identify a prohibited transaction and assess how to reverse it optimally
• Create far more accurate prospectus expense examples
• Quantify account value loss, and added cost, due to investors’ poor share class choices
• Evaluate the economic merits of moving brokerage clients to advisory accounts

 

Recruiting and Practice Management Issues: Recruiting and Practice Valuation Tool

 

• Create more competitive pay packages to recruit advisors
• Compare competing offers for the same advisor
• Evaluate offering a fixed payout to a guaranteed production level
• Project impact of an offer on practice value at any future time
• Evaluate how an advisor’s sales mix affects a firm’s revenue
• Determine optimum loan repayment terms
• Compare bonus options tied to assets, retention, and production
• Maximize the value of an up-front check
• Forge an optimal earn-out arrangement
• Evaluate how returns affect pre- and post-tax income
• See how differentials in payouts affect net income and practice value

 

Personal Planning, Borrowing, Housing and Retirement Issues: Mortgage, ADO, and Other Tools

• Evaluate the merits of saving for retirement using a taxable accounts (Yup!)
• Compare retirement options net of state tax and reflective of filing status and residency
• Divide marital assets far more efficiently to optimize future net worth
• Create a more economically viable pre-nuptial agreement
• Compare mortgage refi options in terms of your net worth and post-tax cash flow
• Determine the interest rate savings that beats alternative investment choices
• Evaluate the impact on housing value due to a change in any key attribute
• Design a home to later sell based on the optimal mix of attributes 
• Know the most to pay for a sports card to resell so that a target return is achieved

 

Plus 15 other tools and 50+ more uses for them…

 

 

 

We license our products, source code, and consult on design and accuracy. What we deliver, and the
technology that we utilize, varies by client and their mode of distribution. Our products use standard
and proprietary analytical, statistical, database, and visual packages. In this way, we are like other firms. But that’s where the similarities end.

We create decision-making tools, not just “calculators.” Our tools model complex “what-if” scenarios in terms of relative outcomes, not absolute ones. Users then can evaluate options before committing to action. The aim may be to maximize net worth, minimize costs, or reduce tax burdens. In contrast, most products simply display point estimates: e.g., “The answer is $512.” What then?

Our latest offering is a suite of trade and compliance tools. They help users comply with the SEC’s new Regulation Best Interest (“Reg BI”) while optimizing profitability. Advisors and executives will know if a trade maximizes account value, minimizes cost, and eliminates conflicts of interest. If not, powerful equalization code generates a pricing solution. No other firm — to our knowledge — generates instant, accurate, and regulatorily-consistent solutions.

Load fund prospectuses often contain math errors. Expense examples and suitability text are particularly vulnerable. Call us to discuss this issue or for a quick check of your firm’s prospectuses.

We also verify the accuracy of online tools and sales brochures. We cover mutual funds, 401(k)s, IRAs, RMDs, mortgages, and 529s. Commonly, returns and expenses are improperly accrued, CDSCs are miscalculated, and textual rationales are in error. In our opinion, most of them — particularly those offered by fund firms and B/Ds — are in need of a serious review.

No. In our opinion, CPA firms are not well-suited for this type of intense mathematical analysis. A CFA or math PhD — with a background in financial services product development — is required. We have two such folks on staff.

The issues have nothing to do with a fund’s audited financials, such as the income statement, balance sheet, capital transactions, etc. Those issues are the rightful purview of CPAs and the big accounting firms. Discussions of risk and how a fund operates also are extremely important. They are the purview of the legal and compliance departments.

Then there is hardcore product level, planning level, and account level math. That’s us. Understanding the economics and implications of their nuanced pricing profiles is required. Very few fund and B/D executives have the requisite acumen, much less any CPA. As a result, fee and performance tables often are wrong. Suitability text is often misleading. Textual discussions are often incomplete. Conflicts of interest inadvertently are created. Mortgage and planning guidance is inaccurate. And on and on…

To be very granular, consider share class suitability. It can be a function of the characteristics of the securities owned at the portfolio level. Buying Cisco (CSCO) over Chevron (CVX) can affect which share is best for investors. (It also affects firm revenue.)

If you are a senior executive at a fund firm or B/D, do you know why? If not, call us to discuss this issue or for a quick check of the suitability profile of a share class or advisory account. Due to the extreme sensitivity of these issues, only a firm’s senior executives should call us.

Several tools we sell actively (listed below). Several others — mainly practice management tools — are on hiatus…though the math can be licensed Below we describe some of our main tools. While not listed, many other tools concern advisors’ books of business, 529 plans, retirement plans, personal planning issues, housing design, borrowing, and mortgages.

Some tools we license, some are accessible via SaaS, and some are available via consulting engagements. Licensed tools run on your servers or ours. They leverage an HTML5 / .NET presentation layer with optimized databases. A proprietary back-end engine is based on C# and .NET languages. Other products use JavaScript, Java, and C#. 

1) Trade and Compliance Analyzer

This risk assessment tool is for senior executives and financial advisors. It can help a firm limit the potential for liability. With extreme accuracy, it models fund, ETF, and stock trades in terms of account value, total cost of ownership, and advisor pay. It handles traditional and clean shares, and any mix of investor benefits like LOI, ROA, and free exchanges. Results reflect all product level fees. They also reflect account level costs such as advisory fees, ticket charges, commissions, and flat fees.

Executives can view trades through the eyes of investors, advisors, and regulators simultaneously. Quickly identify issues like conflicts of interest, reverse churning, and prohibited transactions. Now users have the optics to see problems and the tools to fix them. Use the tool to set policies and monitor advisor compliance with firm-level guidance. This tool helps you satisfy SEC and FINRA due diligence requirements and mandates under Regulation Best Interest. Results are audited. The federal regulators license our algorithms. Offered on a licensing basis.

2) Trade Surveillance Tool

Identifies and helps to rectify problem trades prior to execution or settlement. Quickly evaluate daily trade runs to identify conflicts of interest, reverse churning, and prohibited transactions. Set account value, cost, and pay triggers to create sortable exception reports to satisfy Reg BI. Results true to the TCA and key regulatory tools. Handles funds, ETFs, and stocks. Offered on a SaaS basis.

3) Profitability Optimizer

Increase revenue for brokerage and advisory platforms, funds, and annuities by up to 10%. Via nuanced modeling techniques, create optimized fee schedules for platforms and products that are Reg BI compliant. Pricing and financing inputs are modeled against the distribution metrics of trade volumes. The approach is unique, and the results are undeniable. Results are audited. Available via a consulting engagement.

4) Share Class Calculator

Displays client account values, client costs, advisor pay, and firm level revenue for any class of a fund. Handles any investment amount, breakpoint schedule, reallowance schedule, CDSC, return, expense ratio, cost of capital, or conversion term. Investors can pick the best share. Financial advisors can evaluate alternatives in terms of clients cost and their own pay. CFOs can see how pricing affects revenue. Compliance officers can spot conflicts-of-interest. Accounting can create more accurate prospectus expense examples. Boards and product development staff can model how portfolio attributes affect a fund’s competitive profile. Results are audited. The federal regulators license our algorithms and this tool.

5) Recruiting and Practice Valuation Tool

Evaluate competing offers or create the most compelling one. This tool is for recruiters and sales managers. It’s also for reps who take a check, forge an earn-out, or sell-out completely. The tool displays gross and net commissions, net-deal-worth, client assets, and practice value. It considers loan terms, interest rates, forfeiture clauses, returns, client acquisition and attrition rates, pricing profiles, before and after pay-outs, deferred comp gained/lost, and revenue mixes (e.g., advisory fees, commissions, planning fees, and insurance premiums). It also considers costs for independent reps, like overhead, licenses, rent, and ticket charges.

On the day the three founding families met to name the company, we realized that we all had black cats as pets. (Is that a good sign or a bad sign?) We wanted the word “decision” in the name. That’s because our software helped people make better decisions. Hence, the name of our holding company was born: Black Cat Decisions.

Stu and Alicia’s cat, Blackcomb (named after the ski mountain), was black cat number one. Mike and Sandra’s black cat was number two. Eric and Debbie’s black cat was number three.

A high producing Prudential Securities Financial Advisor suggested the name. Our name aptly conveys this sentiment: Full-service advisors (or “brokers”) help families in meaningful ways. With an advisor by their side, clients are more likely to achieve their financial goals: retiring earlier, sending a child to the school of their choice, buying a nicer house, increasing their wealth, protecting that wealth, or leaving more to charity.

Our tag line is “Broker Village: When the math matters.” Applying solid math to business issues allows firms and individuals to make better decisions. If an issue is of import, accuracy matters, and our firm can help. As a friend once said: “Better to be in command of the math than a victim of it.”

Clients have included broker/dealers, federal regulators, and investment firms, like mutual fund, annuity, insurance, and managed money firms. We also work with law firms, CPA firms, sports card dealers and other entities. Most contracts prohibit us from listing the names on our site. Our clients are brand name Wall Street firms. Currently, our tools and services are most popular with senior executives at B/Ds and regulatory agencies.

Our holding company, Black Cat Decisions, incorporated in June 2000, though we started it a bit earlier.

Nearly twenty people associate with us on a full-time, part-time, consulting, or investment basis. Several of us come out of senior positions on Wall Street. We are all professionals with a lot of experience in our respective industries. Those industries cover financial services, banking, consumer packaged goods, programming, systems architecture, and consulting.

At Broker Village, we have an explicit understanding of what it is like to be a financial advisor, a decision-maker, and/or travel in the field as a wholesaler. Several of us were – and are — advisors, wholesalers, and/or senior executives on Wall Street. That covers the money management, mutual fund, private investor, and hedge fund sides.

Our mission is to be a premier provider of decision-making tools to the retail financial services industry. Our approach is to help investment firms work more efficiently and objectively. Users of our tools may be financial advisors, executives at fund firms and B/Ds, and federal and state regulators. By using our tools, clients should see an increase in their sales, a reduction in the potential for liability, and/or improved compliance with regulatory mandates.

Our philosophy is that financial executives, advisors, and investors can make decisions that are more objective and, thus, more profitable. With no easy way to evaluate the long-term results of a decision, they often do what comes easy. As our tools demonstrate, small changes can lead to big results. For example, with a small change to their sales mix — and without compromising clients in any way — an advisor can increase practice value by 25-50%. All they need is the “proof” to convince them to take the required course of action.

We assume that advisors always recommend appropriate products and services. Once determined to be suitable, several pricing options may be available. Broker Village never suggests that an improper or unsuitable product or service be sold to any client for any reason. Also, we assume that advisors ALWAYS effect transactions that are in concert with state and federal regulatory guidance. A client’s best interests always comes first. Period.

Calculators are unique software tools. Advisor tools display assets and pay for any sales mix, returns, fee schedule, or payout. Executive tools display client asset values, client costs, advisor pay, and firm-level revenue for different business models, product pricing profiles, and compliance efforts. Personal planning tools display net worth and cash flow net after state tax.

Results print, save, and display in graph and tabular form. All tools can be customized. They include sales ideas, PowerPoints, training, and support.

Advisors can determine the effects of a decision before committing to a course of action. With better decision-making abilities, their productivity should improve. Firms can make better decisions about the products they offer and markets they enter. Profitability could rise and the potential for liabilities may fall. Individuals can put more money in the bank with little extra effort.

Calculators make life easier and/or more profitable. They can model the financial results of a business decision (like an advisor converting from commissions to fees or a firm re-pricing a share class) before committing to a course of action. Hence, an advisor’s productivity should increase as might a firm’s revenue.

They are affordable and available on a licensing or SaaS basis. A license allows a B/D to customize them to reflect their brand: default values, sales ideas, logo, colors, fonts, etc. Generally, we do not sell to individual advisors. To discuss a license, call us or email info@brokervillage.com.

Any firm that licenses a calculator should ensure that they meet the requirements of their legal departments. Broker Village will make any reasonable changes to the software, and to the associated marketing and training material, to accommodate the needs of a client.

The tools are best used in conjunction with a training module or educational presentation. By themselves, the tools do not always convey the proper perspective. An advisor never should make an investment recommendation to a client based solely on their compensation. Likewise for firm level business and pricing decisions. Hence, Broker Village strongly urges all client firms to make the tools part of an overall campaign that serves to benefit their clients.

For any license, we “train the trainer.” We support that person or team through emails, phone calls, Zooms, and visits. We are always there for the trainer. To assist individual users, like advisors or investors, the client firm does that work. Broker Village would prefer not to speak with advisors and investors directly.

It depends on the tool. Consider the new Trade and Compliance Analyzer. You can go live almost immediately with the Broker Village branded version. Your branded version and other deliverables likely will take a few weeks. One client went live one day after contract approval. We provide onsite and online training to ensure that you’re fully versed in how to use our tools.

Yes and no. Some tools have a save feature and others do not. For those that do, while a session is live, information is saved. There is a save button, but it must be clicked; nothing saves automatically.

Yes we do! Please contact us for the details.

Our logo is a rendition of the mechanism that was a central component of the very first calculators. Thus, it represents our product line: the “Calculators.”

No and yes. Our products are for financial advisors and financial service executives. If an advisor or firm that licenses our tools wants to make them available to individual investors, it’s OK with us. We will not do so because we are not licensed to provide investment advice. All risk and liability is on the shoulders of the firm or investment advisor, not us.

No. No client information of any type is ever captured by our products on our end. 

No company-specific information is ever captured by Broker Village. For example, if an advisor sells XYZ Funds, Broker Village never knows.

Our offerings reflect requirements driven by our clients in available technologies. We also use several modeling products to help validate that data and analytics conform to requirements. Both commercial and proprietary tool-sets are used.

Our new products run as Software as a Service (SaaS) on public or private cloud. They leverage an HTML5 / .NET presentation layer with optimized databases. A proprietary back-end engine is based on C# and .NET languages. Other products use JavaScript, Java, and C#. In all cases, modifications are easy and deployments are quick.

All tools can integrate with client platforms, be installed locally, or hosted in a cloud infrastructure. Our latest ones support the use of standard APIs for interoperability with data lakes or data warehouses.

Tool customization reflects a firm’s branding, defaults, text, and data, as-does sales material, training, and support. Several tools come with independent legal, CPA, math, and IT letters. They attest to the relevancy, consistency, accuracy, and suitability of our processes and results.