Sycamore’s Mike Overdorf Creates Data Solutions Powerhouse From Roots In Commissionable Calculations

Salesforce-Based Wealthtech Platform Continues To Reinforce Leadership Position With Independent Broker-Dealers
Mike Overdorf, Founder & President, Sycamore Company
Mike Overdorf, Founder & President, Sycamore Company
Janeesa Hollingshead, Contributing Editor, Wealth Solutions Report
Janeesa Hollingshead, Contributing Editor, Wealth Solutions Report

In the fast-evolving independent broker-dealer channel within the wealth management space, home office executives face myriad operational and regulatory complexities, particularly when it comes to calculating and distributing commissionable earnings to financial advisors in a compliant manner.

While various solutions providers have tried to address this task over the years, very few of them have done so in ways that have created a modern, fully integrated front-to-back-office technology platform for independent wealth enterprises that encompass a broker-dealer platform.

And yet, that’s exactly what Mike Overdorf, Founder and President of Sycamore Company, has accomplished over the years, since launching the firm in 2008. Sycamore’s Salesforce-based platform maintains accurate records and drives precise commission calculations for advisors, coordinating highly labor-intensive workflows that require meticulous data aggregation across a wide spectrum of platforms to account for fees, ticket charges and other variables.

Moreover, by going the extra step of capturing both clearing and custody data, Sycamore has been able to move significantly upstream in the value creation cycle for wealth enterprises as a provider of actionable data and analytics for independent firms that have broker-dealers across the industry.

WSR recently caught up with Overdorf to discuss how centralizing data from various sources enables home office teams to make informed decisions about where to direct their efforts while building and refining their enterprise growth strategies.

WSR: What are the most prevalent operational challenges facing IBD executives when it comes to calculating and distributing commissionable earnings to financial advisors on a fully compliant basis?

Overdorf: One major challenge is ensuring that the advisor is properly licensed and registered in the respective state to earn that commission. Keeping track of state registrations and licenses is complex. Another significant challenge is calculating and paying commissions accurately. This process is labor-intensive and time-consuming, especially depending on the platform an IBD uses. Aggregating all necessary data to ensure accuracy in fees, ticket charges and commission calculations for each cycle requires substantial effort.

WSR: How can the combination of clearing and custody data help IBD leaders arrive at new insights and help form growth strategies for their enterprises?

Overdorf: First and foremost, having your data from all sources in one place provides a more accurate and broader picture of where your revenue is coming from. Based on this, IBD leaders can identify areas to focus on. For instance, if you assume a lot of revenue is coming from a certain financial product vendor but find that’s not the case, you can adjust.

Centralized data helps eliminate unnecessary noise, allowing firms to identify areas where they need to focus their efforts.

Mike Overdorf, Founder & President, Sycamore Company

With accurate data, you can nurture relationships and spend more time with the firms most of your advisors are using. Centralized data also helps eliminate unnecessary noise, allowing firms to identify areas where they need to focus their efforts. For example, if revenue from a specific vendor is less than expected, firms can shift their focus to more profitable relationships.

WSR: Why are data accessibility and data portability frequent recurring issues for IBDs, and how can these enterprises utilize wealthtech solutions such as yours to address them?

Overdorf: Data accessibility is always an issue because not only do you need it for payment, but also for compliance work. You need data available to properly supervise and surveil your advisors. Data portability is key for all IBDs because every advisor wants assurance that their data is portable, should they decide to move to another firm.

Every advisor wants assurance that their data is portable.

Mike Overdorf, Founder & President, Sycamore Company

Platforms like Sycamore can help because they aggregate all data in one place, eliminating the need to manage compliance and compensation in different siloed systems. Data portability is also made easy, providing a comfort level for advisors knowing they can port their data without problems, strengthening the relationship between the advisor and the home office.

WSR: What are the advantages of having your solutions built on Salesforce, and how do your IBD enterprise customers benefit from this architecture?

Overdorf: There are many advantages. First, the security of the data. Salesforce is much larger than Sycamore on its own, offering higher levels of data security and redundant backups. Additionally, being built on Salesforce means all our modules are in one platform, eliminating the need for siloed systems for different departments.

We also benefit from new functionalities Salesforce rolls out, such as artificial intelligence. Many other vendors also build on Salesforce, so our clients can easily integrate additional functionalities through Salesforce’s AppExchange, adding specific features without waiting for us to build them. This allows firms to offer advanced services similar to larger firms without the high costs of custom development.

Many organizations leverage Salesforce integration for various purposes, including check cashing, check writing, payment processing and vendor management. By unifying these functionalities, Sycamore empowers firms to expand their capabilities without the need for custom development. Previously, smaller firms faced financial constraints that prevented them from implementing advanced features.

WSR: How do your data solutions help IBD firms address stagnant profitability and growth issues?

Overdorf: Having all data in Sycamore with robust reporting allows home offices to identify profitable advisors and those whose productivity is declining. It provides a clear picture of all advisors, enabling better support and training programs for mid-level producers to reach the next level of production. For example, if an advisor is underperforming in offering certain products, the data can highlight this, and the firm can provide targeted training or partnerships to improve performance. This holistic view helps firms make informed decisions on where to focus efforts and resources to drive growth and profitability.

Pristine data is key when it comes to evaluating an advisor’s performance. A closer look at the data might reveal a surprise when it comes to advisor’s production numbers. When data is disorganized, it’s challenging to see what she has accomplished and what she’s actually produced.

Data integrity allows firms to unearth the diamond in the rough.

Mike Overdorf, Founder & President, Sycamore Company

Data integrity allows firms to unearth the diamond in the rough and lets firms focus their efforts effectively on the right advisor through additional support.

Janeesa Hollingshead, Contributing Editor at Wealth Solutions Report, can be reached at editor@wealthsolutionsreport.com.

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