When the founders of newly formed group of advisory firms, Financial Advocacy Network, went looking for an independent broker-dealer, its unusual business model posed a challenge.
The Washington D.C.-area firm's co-founder, Chris Cox, says he and his partners chose LPL Financial because it was not only able to support the company's network business model -- which includes four advisory firms and 13 advisors, with $450 million in advisory and brokerage assets -- but it would help expand it.
"LPL didn't want us to fit into a niche," Cox says. "LPL feels like a place where we can really do this business uninhibited. They are promoting our business model, which has been a challenge in the past."
Financial Advocacy Network aims to empower hybrid firms to be successful in a group setting where they can access the skills of other advisors, Cox says.
"It's the coming together as individuals and the leveraging of intellectual capital," he says, offering a hypothetical: "So let's say Steve is an advisor and I know he is really good at retirement planning. So I don't have to be as good at retirement planning."
In an unusual offering, Financial Advocacy also does financial planning for many of its own advisors' personal and business needs, Cox says.
BRINGING ON NETWORKS
Financial Advocacy's firms have joined LPL's broker-dealer and RIA platforms -- and LPL is currently in talks with several other planning networks about moving over to its platforms, says Steve Pirigyi, LPL's executive vice president of business development.
"I believe you will start to see larger more complex organizations choose LPL as their next, and hopefully their last, B-D," Pirigyi says.
He called Financial Advocacy's structure "a forward-thinking innovation on the advisor group business model."
The network's four member advisory practices serve a range of clients across the country, including mass affluent and high-net-worth individuals and institutions. Those practices include The Monitor Group, of Rockville, Md. -- of which Mr. Cox is also a principal financial advisor -- Wenger Financial Services, of Newport News, Va.; Legacy Wealth Management, of Mount Pleasant, S.C.; and NewCorp Wealth Strategies, of Atlanta.
All four conduct their fee-based advisory business through Financial Advocacy's RIA, Maryland Financial Group.
The biggest attractions for larger firms like this one is LPL's scale, open architecture, self-clearing, the focus on growth and transition support, Pirigyi says.
"We are one of the few firms that can handle processing them over," he adds.
Cox says that he spoke with other independent B-Ds, but claims they found the network's business model too complicated. "In our search," he says, "we ran into many other B-Ds that didn't have as open as a vision or didn't understand what we wanted to do."
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