Bill Hamm shrugs off LPL recruiting, eyes ‘clear distinction’ in IBD launch

A recruiting fight has broken out in the wake of the move by Bill Hamm’s Independent Financial Partners to launch its own broker-dealer.

But it hasn’t prompted Hamm to rethink the decision.

“If anything, it's probably fortified my desire to get this done,” Hamm said in an interview before IFP’s self-styled Independence Day under its new BD, IFP Securities, on May 22. “There's probably a greater opportunity than we originally thought.”

After Hamm said that the Tampa, Florida-based IFP would drop its affiliation with LPL Financial last year, CEO Dan Arnold vowed the firm would make a “a compelling offer to stay with LPL.” Indeed, LPL has been aggressively wooing IFP’s advisors.

Losses have started to pile up for the new IFP Securities: An independent RIA launched, one major retirement-plan focused team exited for another IBD and other OSJs have picked up some advisors. The firm now has around 210 advisors and $5.4 billion in assets under management, compared to 520 with $9.5 billion in AUM last year.

Hamm says he expected to launch with about 200 to 220 advisors. The firm will open with about $15 billion in client assets and recruit to get IFP’s headcount closer to 300 by year-end, according to Hamm. IFP is “getting a ton of interest” from prospective advisors, he says.

IFP is banking on its proprietary technology, Hamm’s family ownership structure and its client cash accounts to help it compete. The firm aspires to be a “very, very small agent for change,” Hamm says.

“Even though some of these large firms may tout scale, unless that scale is used for the benefit of advisors and clients, then what good is it?” he says.

“Compared to some of the other guys, we're like a pimple on an elephant’s butt, but sometimes that pimple can be aggravating,” Hamm went on. “Having been an advisor for 34 years, these are things that I've wanted to do.”

The divorce from LPL does seem amicable. The firm and Hamm mutually elected to part ways after finding that they “were not strategically aligned,” Arnold told analysts the month after Hamm announced that IFP planned to go. The two parties have also issued supportive statements about their time together.

Fellow OSJs have not shied away from pitching IFP’s advisors. Another hybrid RIA-OSJ called Integrated Financial Partners, which is based in the Boston area, grabbed four practices with $350 million in client assets from Hamm’s network.

Independent Advisor Alliance — which operates near one of LPL’s corporate headquarters in Charlotte, North Carolina — appears to have added the most advisors from IFP. The RIA-OSJ has signed 73 IFP advisors, with six more in the process of finalizing agreements to join, spokeswoman Dana Ryan says.

“We are very happy with this number as we beat our own projections of the number that we thought would join in this first wave,” Ryan said in an email, attributing the result to “positive word of mouth from the IFP folks who joined us early on.”

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LPL’s largest RIA-OSJ, Morristown, New Jersey-based Private Advisor Group, has 640 advisors and nearly $17 billion in AUM. In December, Private Advisor said it had already grabbed 22 advisors with more than $1 billion in assets from IFP’s ranks.

Private Advisor Managing Director John Hyland declined to provide any updated metrics ahead of IFP’s launch as a BD.

“There are still advisors making decisions. And I think you have a lot of advisors pumping the breaks a little bit,” Hyland says. “I think how Bill and IFP execute early on in the process is going to be really important to their advisor community.”

A spokesman for LPL also declined to comment on the firm’s total retention figures from IFP ahead of LPL’s first-quarter earnings announcement later this week. An analyst had asked Arnold for an update on IFP on the firm’s fourth-quarter call at the end of January.

Advisors managing two-thirds of IFP’s assets made their decisions, and three-quarters of their assets will remain with LPL, Arnold said at the time.

“Now that still leaves about one-third of the advisors that are working through the process, and we're focused on making sure we're educating them on what their options and alternatives are in the spirit of helping them make an informed choice,” Arnold said.

Advisors remaining in the IFP fold will receive free shares in the firm adding up to a 15% stake. Asset manager Pacific Current Group picked up a 10% stake in the hybrid RIA in January, and Hamm and his family own the rest, with plans to retain at least 60% control at all times.

The setup will help avoid the “significant disruption in an advisor’s world” that takes place when firms change hands, Hamm says. IFP also plans to cap its fee at 30 basis points on cash sweep accounts, to give clients the higher interest rates usually retained by large brokerage firms.

“We want to shine the light on that,” Hamm says. “Hopefully it’ll set a clear distinction.”

IFP pushed back its initial April 1 start date to May 1 to accommodate advisors’ Tax Day deadline. The firm then changed the launch date to May 22, it said, to give advisors more time. Hamm registered with IFP on Feb. 15, after FINRA approved the firm’s application at the beginning of February.

Hamm’s son Chris serves as the firm’s COO and its lead on technology, working with a dedicated tech team of six staff members to develop its proprietary Advisor[x] interface. Last month, the firm unveiled its latest integration with MyRepChat for compliant advisor texting.

“Everything we do is responding to things that advisors want,” says Chris Hamm. “We have a goal of creating our own hybrid platform. We know better than anyone what works and what can be improved.”