Broker Check
Standing Apart and Above the Crowd

Standing Apart and Above the Crowd

| October 07, 2020

There are many variables to consider when financial advisors are deciding whether to set up their own independent practice. One of the most critical decisions is the broker-dealer, a relationship that will be important in both good markets and in not-so-good markets.  If advisors like the idea of a more personalized experience provided by going independent, choosing a small firm brings some important considerations.


An article in Think Advisor takes a ‘what if’ approach to evaluating broker-dealers, and suggested financial advisors scrutinize how well they are positioned to handle the impact of bear markets. The article suggested smaller firms tend to be more vulnerable. But Cutter & Company, a Registered Broker-dealer and Investment Advisor, is particularly strong in areas the author suggests most firms with fewer than 100 advisors are weak.


The Sweet Spot: Small and Strong


Small firms are viewed in the article as being “more vulnerable to a downturn in the markets than they were in 2008.” But Cutter & Company has been through several bear markets since the business started more than three decades ago.


Co-founders Debbie Castiglioni (CEO) and Bill Meyer (President) started working together in 1983 and established the firm in 1988. They weathered the serious market downturns of the “Tech Bubble” in 2001 and “The Great Recession” in 2008-‘09 without any lay-offs. Cutter & Company is well-positioned to navigate future turbulent moves in financial markets and stands above most small broker-dealer in these additional key areas.


  • Does the broker-dealer have high debt levels? Cutter & Company operates with no debt and no leverage.
  • Does it have ample net capital or access to additional cash to prevent a net capital violation? Cutter & Company is in a strong capital position. In addition, the firm uses an independent contractor model. So, the firm is only responsible for its staff and building overhead should markets sell off. 
  • Is the firm heavily weighted in illiquid investments or investments that have a high litigation risk?  Cutter & Company does not have a significant holding in or promote complex products. 
  • Does the broker-dealer have a deep-pocket parent company? Cutter & Company has been privately-owned since the first day in business.
  • Does the broker-dealer’s errors and omission insurance have high aggregate coverage? Cutter & Company maintains $2 million in E & O aggregate coverage.


Cutter & Company also has an extraordinarily clean record when it comes to regulatory compliance. The firm has been able to run a successful, compliant business in one of the most highly regulated industries. At all times, the focus is on honesty and integrity.

Even though the firm is small, and has been by design from its inception, Cutter & Company is strong as measured against the important factors financial advisors should consider when considering the independent channel. If you have been thinking about making a change, we welcome your scrutiny! Reach out to Debbie or Bill with your questions today.