Is it Time to Consider Changing Clearing Providers with Michael Scaplen

Michael Scaplen is the senior vice president of sales and relationship management for Axos Clearing, LLC, a full-service clearing firm that provides flexible clearing solutions focused on empowering introducing broker-dealer and registered investment advisor correspondents to grow their businesses.

In this episode of Power Your Advice, Doug Heikkinen and Mike discuss recent changes in the financial services industry, and how Axos has evolved how it serves broker-dealers as a result.

  • How consolidation across the industry has affected Axos
  • How broker-dealers can recognize when it might be time to consider changing clearing providers
  • How Axos’ onboarding process makes the transition seamless for broker-dealers
  • What proactive steps can broker-dealers take to prepare to make to change clearing providers

Resources: Axos Clearing, LLC

Related: Success Begins With Listening Deeply to Your Clients with Michael Scaplen



Douglas Heikkinen, Michael Scaplen

Douglas Heikkinen  00:13

Hello and welcome to the Power Your Advice Podcast.  The Power Advice Podcast designed to bring Financial Advisors new ideas, why those ideas should be considered, and how to implement them into your business.  This podcast is brought to you by Advisorpedia the best place for advisors to grow their minds and businesses. . .

This is your host Doug Heikkinen.  And our guest today is Michael Scaplen who's senior vice president at Axos Clearing welcome back Michael!

Michael Scaplen  00:40

Hey, how are you doing out there?

Douglas Heikkinen  00:42

I'm good, the Axos Team has seen a lot of evolution through the years you guys have been around for a while, can you talk about some of the more recent changes in the industry that has driven or cause you to involved evolve in how you serve broker dealers?

Michael Scaplen  01:00

I absolutely can absolutely can so i've been on the street in the industry for roughly 20 years catering to the broker dealer community on the on the clearing side and the last five years or so what we've seen is an evolution into technology and innovation is to drive to change this this one static market and really push it forward leveraging what we have a society society have built on the tech side in the last five or six years we see these younger generations are starting to get into it and they bring with them a drive and a know how of what they've seen what they've grown up with not just on the street but in their daily lives that access to technology is being pushed into our marketplace as a clearinghouse that evolution for us began two years ago with the acquisition from access financial and has evolved us quietly over the last two years as we've built this foundation so we're trying to keep pace with what's happening on the street and not just keep pace with it but stay two steps ahead of it

Douglas Heikkinen  02:08

Yeah, there's been a lot of consolidation in the clearing business the last few years how has that affected access and your clients?

Michael Scaplen  02:17

For us we've seen that we've been in we've positioned ourselves in a good place for that movement in the market and what we've seen in the consolidation is our competitors either exiting specific business lines or exiting the clearing game altogether and last year there's been three or four that have either shuttered down certain pieces of their business so they no longer want to go after it or they've rolled into others so for us we were private equity clearing house had been running for about 20 or 18 years now and with the acquisition from axos it's given us resources and positioned us to gather some of that business from the exit and clearing houses so we've been able to move up the ladder and go after some larger clientele and really put the hammer down in the last year or so as we've resourced ourselves to go after that business

Douglas Heikkinen  03:14

So, just to follow up on that has the consolidation and people exiting the business surprised you?

Michael Scaplen  03:20

On the clearing side no, I mean there's always movement it's it I guess the amount of firm or the amount of business that has been shuffled up has been surprising in the last year on the clearing side one thing we look for is an opportunity when one of our competitors falters and it did feel like last year so that they were more than ever where we were targeting one firm and then six months later it was turning our sights on the other firm because they were no longer any business or consolidated with another firm so it's not surprising that there's movement in the market but it is surprising at the amount of movement we've seen in the last couple years

Douglas Heikkinen  04:02

You know we talked a while back about Axos and and the pillars that you bolt it upon service technology and products.  If I remember correctly are those the pillars of access broker dealer business as well?

Michael Scaplen  04:17

Absolutely those are the foundational pillars for access as a whole we transcend that across all of our business units because they're there those three pillars are what set us apart so when you start with service you start with the business development team who's out there introducing the brand to various broker dealers conferences and trade shows pre COVID and just getting out there really showing who we are and talking about what we can do but that transcends across business development and into the personnel we have in our home office in omaha we have a fantastic team most of them are tenured have been there for quite some time they understand the business they understand the clients they understand the broker dealer community So we do bring them in, they are well handled by that team. And you know, my, from a technology standpoint, we are always evolving in that space. And that is something that we really take pride in. We had built some stuff before axos. But access is, you know, x axis is brand is built on technology. And that is really pushed into the clearing side. And we've seen some new platforms come to light on our side of the fence, we've got a new ra platform that is being launched shortly. One of our partner platforms is sunguard. And we're getting a newer platform in the next couple of weeks with that, to provide to our clients. We've got some customer facing GUI interfaces that we'll be rolling out in the upcoming weeks. And then to cap that off, we really set the foundation with a with a new API stack. So that technology, again, is continually evolving, we're always looking at it, we're always running a gap, we're always looking at what the competition has what the clients want. And we're taking straw polls from our broker dealers, we sit down with them we have, we have meetings with various firms to talk about what they need and what they would like to see. And we continue to develop that on the tech side. And then finally, the products, you can't have anything without a full product suite. So we're always looking to see what products that broker dealers want. Is it more stuff on the alternative investment side? Do they need more stuff in the fixed income side? Are they looking to get into crypto, are they looking to get into some product to be the tip of the spear and get there before the other broker dealers do. And again, we have meetings with our broker dealers on a quarterly basis, we go into various territories, or we're going into various territories pre COVID. And meeting with the broker dealers. Now we're doing that digitally we're doing our mark marketing team is doing a fantastic job in setting up online web demos, where we can do some little face time with the broker dealers, and really dig into what they want to see on the technology side and the product side, and then continue to develop that out for them.

Douglas Heikkinen  07:11

Changing clearing and or custodial providers seems like a really daunting task. At what point should a broker dealer consider changing providers? And at what point is it the right thing to do for the client?

Michael Scaplen  07:24

Well, it's a it's a, it's a daunting task unless you have the right team to help you transition. And I believe that access, we do have that that team in place to assure broker dealers from one clearing house to another, listen to any broker dealer out there who has any concerns about their clearing house should be talking to another clearing house. And that's us included, right? So we pride ourselves on service, we pride ourselves on being able to handle the business that we have here. But when we're out there, we're talking to other broker dealers, we hear that they're having service issues, or they're having tech issues. And that's something you want to get in front of if your clearing house is not providing you with what you need, then you should open up that conversation. It does take a little bit of time, it is a heavy lift to move from one clearing house to another. But again, we have the tools and the personnel in place to support their business and make sure that they're getting everything that they need. We're in it for the long haul. And we feel that some of the competition is not.

Douglas Heikkinen  08:24

Yeah, we all realize that every client has their unique requirements. But can you talk about how you onboard your broker dealer clients to make the transition for them and their clients as seamless as possible?

Michael Scaplen  08:37

Absolutely, it's a it's a multi stage approach. And everybody on the C suite gets heavily involved from the from the very first part of the introduction of our broker dealer to our firm, they go through a process where we have to approve them with our credit committee. And as they come in, they meet the C suite. Right, we're talking to them with our head of operations with the head of AML with the head of risk. Our firm fully understands what that business is before the contract is even signed. And then once it is signed, we begin into this process, but that again, transitions them slowly and smoothly into into our structure in our infrastructure. So what happens is, business development brings it through the committee. It triggers a process into our conversion team, which is several several person team sets up a conversion that works through exactly what they need. Is this a tape to tape? Is this a bulk eightcap? Is this a brand new firm that needs to be set up? What do we need to do for training? So all these meetings are happening once that contract is signed, and the sales team who brings you in? They don't just drop it off and walk away. That's not how we're structured. The Sales Team stays on is relation management once you transition through that conversion to make sure that you're being handled to make sure you have everything you need and your businesses is a success so some firms have their sales team drop that lead off and walk away but here we don't that salesperson is fully responsible for the lifecycle of the entire relationship so again it ushers in this service model where we've got multiple personnel heavily involved making sure that your transition goes smoothly that you have everything you need and more what do you need for today and what do you need for tomorrow we're taking all that into account and making sure that your business's support

Douglas Heikkinen  10:44

You have a great tagline it's — clearing evolved — but it's also a big statement tell me how access works to stay ahead of the curve?

Michael Scaplen  10:53

Absolutely. So clearing evolved has been discussed for the last two years and it's something that we've been quietly kind of setting up in the background right we knew that evolution was coming we knew that we were going to rebrand clearing the ball once we really started pushing that tagline and what we did was we set that foundation we set the base and that's the most important thing right if we're going to evolve and we're going to be the tip of the spear in this evolution we need to make sure that we're on solid ground and that's what we've done for the last two years we've worked through a process where we set up the test we set up the api we set up relationships with other vendors to really make sure that this offering is ready to go and now that that foundation is set you'll see a lot more on that clearing the ball tagline that is that is what we're going to be going forward with as we as we continue into 2021 and that's what's going to be pushing the brand this evolution but we are not sitting quietly we are not waiting for stuff to happen we are out there we're looking for acquisitions we're looking for personnel we're adding to staff we're adding to our products we're adding to everything and we really have our sights trained on being the top correspondent clearing from an ra firm out there for all of the all of the clients and prospects we're looking to be number one we're not going to settle for second place and it all started with this foundation and this evolution to really push the drive market into levels unseen

Douglas Heikkinen  12:31

Last question for you, what advice do you have for broker dealers who may be considering changing clearing providers and are there any specific steps they need to take to prepare?

Michael Scaplen  12:44

I would say establish that relationship early right so start talking to myself or my team or our personnel in omaha talking about what you need talking about what you want make sure that you're prepared for that move it can take a little bit of time again there's a process that we have to go through for the for the approval but if you're sitting with your clearing provider and you're not happy the conversation should start today we are always available we're always talking to different broker dealers about what their business looks like what it could look like what it would look like here we do product demos and service talk and we do a whole host of things where we can start pulling them in and they don't have to transition today right but let's start having that conversation let's show you what it looks like and start setting that that dialogue into what it would be like to be here and that's what we're that's what the business development team is here for and that's what we do a lot of web demos these days and hopefully when the world reopens we'll be more in people's office but i invite every broker dealer out there who's listening who is not 100% happy with their clearinghouse let's have a conversation and let's let's start the ball rolling

Douglas Heikkinen  14:05

That's great michael we really appreciate you joining us today.

Michael Scaplen  14:09

I appreciate it thank you very much for your time

Douglas Heikkinen  14:11

We certainly wish you access the best of luck.  For everybody and Advisorpedia our producer Jakie Beard and the power your advice podcast team, this is Doug Heikkinen


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