Peter Mangan is no stranger to independent financial advisers, which is exactly why he left his alma mater, TD Waterhouse, last year to start a new San Diego-based brokerage firm, Shareholder Services Group.

The firm, which is due to open for business officially in June, hopes that advisers will find its brokerage and custodial services attractive enough to leave their current custodian.

Shareholder Services Group will provide not only the products (cleared through Bank of New York/Pershing) and technology that advisers need, but "the quality of the contact they have with us is going to make a big difference," Mangan said.

But gaining ground in an already crowded marketplace will not be easy, industry observers said.

"The RIA clearing and custody marketplace is a difficult one to enter in this environment because Schwab, Fidelity and TD Waterhouse have set the barriers to compete at a very high level. New entrants have to make substantial investments in order to draw clients away from those establishments," said Matt McGinness, a senior consultant with Cerulli Associates in Boston.

McGinness said that many firms feel that there’s an opportunity to grab disgruntled Schwab and Waterhouse advisers who are feeling slighted that their firms might compete with them by offering discretionary advice.

By June of 2004, Shareholder Services Group hopes to manage approximately $500 million in assets. Transaction fees have not yet been finalized. Going forward, Mangan expects to add trust services and also plans to create an advisory board to help determine particular services that advisers want.

After Mangan created the adviser division at brokerage firm Jack White & Co., which TD Waterhouse bought in 1993, he headed up Waterhouse’s institutional services group. Later, he also became chief operating officer for its mutual fund division. Mangan said the parting with TD Waterhouse was amicable.

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.